Originally published on Craft Business Daily on October 4, 2021
Dear Client: As e-commerce has grown and become one of the hottest topics in bev alc over the past several years, you have no doubt familiarized yourself with some of the largest platforms in the arena like Drizly and Gopuff. But there’s another platform that's of particular interest to the beer category that we’d like to call attention to: TapRm.
The company was founded in New York City a few years back by Jason Sherman, who served as one of the founding members at Anheuser-Busch's ZX Ventures, running herd on acquisition investments in beer e-commerce for the global distribution arm. After a couple years at ZX, Jason decided to create his own platform with TapRm
SO, WHAT EXACTLY IS TAPRM? It's a three-tier compliant e-commerce platform built for brands primarily in the beer and hard seltzer segments, and it supports these brands by "Integrating into their websites and helping them scale and launch in new cities, or even grow their online presence in existing cities," Jason told CBD.
They work closely with their partners, he says, as deliveries come "in a branded box for them, with their swag, with their items, and it gets delivered to their customers all through their integrated websites, as well as the many platforms we plug into, one being of course, taprm.com."
TAPRM PRETTY MUCH DOES IT ALL, according to Jason, acting as the "distributor, retail fulfillment center, beer store, pick/pack..." the only thing they don't do is the last-mile delivery, which they have partnered with courier network, AxelHire, to carry out.
WAIT, THEY ACT AS "THE DISTRIBUTOR?" How does that work out? Jason tells us that they're actually "the largest purchaser of beer from all the wholesalers in New York City. So, we do work very closely with all of them. We typically form very close relationships with their brands. And then, those distributors either refer those brands or those brands are coming directly, and we purchase from distributors."
Of course, not all of their brand partners have a distributor. So, they'll help build them up online, and "then as soon as they reach a certain level of consumers awareness or demand, then we go introduce these nice brands to big distributors in the region. So, we help them build a base of following so they can approach these distributors with, 'Hey, look at all these people that love our products. Look how well the product is being retained in the eyes of these customers.' Now, distributors have something to push out onto the shelves."
HOW THEY HELPED CATAPULT LOVERBOY. One of their best brand partner success stories, Jason said, has been with Loverboy, a brand that BBD has covered a good bit over the past year. "I met [Loverboy founder] Kyle Cooke in May of 2019, right as we were launching. And he was our first brand partner," Jason said. "We built a website with him that we integrated into, and we were just selling in New York.
"I think in the first 48 hours, we sold about $50,000 worth of product just to New Yorkers, same day delivery. And then from there, in the first year, we started selling from TapRm's wholesale group. We started selling to bars, restaurants, new markets. I think we sold about $2 million in the first year. And then we helped move him along to one of the largest distributors in the region, Manhattan Beer."
that partnership "really kicked off the growth that we have because they saw the power." Jason said. "If you can create this online demand like Loverboy, then you can start to use that to grow your distribution networks." [Note that TapRm still maintains a partnership with Loverboy, as he brand still does a good chunk of business through its online site and TapRm continues to fulfill those online orders fro the company's hard seltzer]
HOW MANY PARTNERS DO THEY WORK WITH? They currently work with about 150 brand partners, which run the gamut from beer suppliers, hard seltzer suppliers, to hard kombucha, ciders and even makgeolli suppliers. They "also have a waiting list of about 300." Jason noted. "The reality is a lot of these brands just don't have wither the budgets or the awareness in every region they'd like to be, to get online. So, they would need to reach certain levels of awareness before we're really able to support them in the way that they would want."
E-COMMERCE NOT A SALES TOOL, BUT A MARKETING TOOL. When brands do come on board, they shouldn't think about e-commerce necessarily as a sales too, Jason said, "because still only about 1% of all beer is sold online. That's it. You can't use that as a primary generator of profit."
"It really should be used as a marketing channel. SO, getting that price down, allowing brands to find their network, find their customers, get it to them, make them have a great brand experience, so that when they do go to the supermarket or to a bar, that's the product that they're going to be getting over and over again."
HOW DO THEY PARTNER UP? "by and large, it's been inbounded at this stage," Jason said, "either distributor referrals, other brand referrals, or just network referrals." But now that they're on an expansion kick, they're reaching out. So they'll "go to some of the regional groups out there that they haven't spoken to before, and say ' Hey, would you like us to integrate your website? Would you like to be on DoorDash?' And we can do all that for them, through our platform."
SPEAKING OF EXPANSION...a key differentiation between TapRm and other e-commerce platforms is with their "franchise network of fulfillment partners around the country." They are currently live in 33 states for shipping, and are rapidly expanding their "same day delivery fulfillment cities" going from three to about 40 this year.
HOW DO THEY MOVE TO NEW CITIES? "The way we expand is we kind of RFP in a city with all the existing beer stores or fulfillment centers that exist for alcohol. And sometimes, we even find new entrepreneurs that want to launch TapRm fulfillment centers in those regions. We are very much focused on great retail fulfillment partners, more so than what city we're going to. If we can find a great entrepreneur or find a great retail fulfillment center, we'll go target that area more than anything else, especially if they're willing to really integrate deeply into our technology stack and use all the workflows that we have an then allow our partners like AxleHire to do a lot of the courier last mile."
Indeed, in partnering up wit hAxleHire, customers are free to order for same day delivery, for next day delivery or schedule a future date from there. And AxleHire cut its teeth doing last mile delivery with meal kits, which as you may know has that same kind of constraints and requirements that pertain to beer.
Which brings us to our final topic on TapRm...
WHAT ABOUT WINE & SPIRITS? You might be wondering... 'why haven't they expanded into wine & spirits?' Well, we wondered the same thing.
Asked that very question, Jason told us that "the truth is wine & spirits is actually relatively easy. Consumers are willing to wait for it. They'll sit on shelves. It can be sort of packaged neatly, it's high margin, way to ship."
With beer and hard seltzer, "people want it that day. They don't want to wait very long for it. And it's perishable...It is a much, much more difficult product to really excel at, from a fulfillment network perspective and delivery perspective," he said, adding that "there's also not as many nationwide recognized brands in beer and hard seltzer, as there are in wine and spirits."
"So we really wanted to do it the hard way." Jason said. "Let's really nail it with beer and hard seltzer, build an amazing platform with an amazing group of brands, and then expand into wine and spirits, so that we don't end up accidentally just getting addicted to the 'Let's just ship wine across the country.' And do it very easily. We really want to make sure we're building a platform for the next hundred yers or so."