It began as a simple text from one friend to another: "Why can't you get alcohol delivered?" Soon thereafter, in 2012, Drizly was founded and nine years later – in 2021 – had grown to be the largest online marketplace for alcohol in North America.
It was purchased by Uber in 2021 for $1.1 billion. Yesterday (2/6) Uber announced it would lay off 168 Drizly employees as it ends the alcohol delivery service app. Alcohol delivery will now be available via Uber, it said. Some Drizly employees will be offered jobs with Uber.
This is an immensely stupid decision by Uber, which has just posted its first profit in its history after racking up more than $30 billion of losses since 2014, the first year in which it disclosed its financial details.
Uber started out as an unlicensed app-based taxi service. In recent years, as losses continued to mount, it has sought to expand into grocery delivery, alcohol delivery and retail delivery. The grocery and delivery sector represented about 20% of the growth in the delivery segment last year.
But at its heart, Uber remains an unlicensed app-based taxi service. We accessed uber.com and the home page beckoned us the opportunity to "go anywhere with Uber." It also bid us to "Drive when you want, make what you need." Nowhere on its home page does it tout groceries – or alcohol.
To be sure, you can click on a two-line peg in the upper right hand corner, you will be taken to a menu page that gives you options – "ride, drive, business, Uber eats, about, help." So, we clicked on Uber Eats.
What we found was a replica of the taxi-service approach: Feed your employees to provide meals in the office or after office, the ability for restaurants to be listed in a database, and, of course, a pitch to "deliver with Uber Eats." Nothing about alcohol.
Do you see the problem here, at least from a retail customer's viewpoint or an alcohol marketer's viewpoint? On Drizly, if you want a bottle of, say, Veuve Clicquot Yellow Label Gift Box or some other bubbly it's right there, click on the product and place the order.
That's because Drizly views itself as "your online liquor store" and partners with licensed bev/al retailers whereas Uber is simply an unlicensed taxi service that dodges license requirements by saying it's an app service, not a taxi service.
There is no magic to the Uber brand – except as a taxi service. As a taxi service, there was magic because almost no taxi company had an online capability when Uber began. And it retains a high degree of magic because a traveler can order a ride regardless of where he is. If the road warrior lands in Kansas City and wants a taxi, he need do nothing more than open his Uber app.
But for alcohol delivery, there is no magic to Uber's brand. Large alcohol retailers, such as Total Wine already offer free delivery with orders of $99 or more. Door Dash offers delivery through its "On the Way Liquor" alcohol delivery service, which operates exactly like Drizly, including having a separate website.
Would Drizly be profitable on its own? Hard to say. After all, Uber only turned a profit just now. Door Dash has yet to turn a profit. Was Drizly profitable under Uber's ownership? We don't know – Uber hasn't broken out the results separately.
Our suspicion, though, is that we've seen this play before: Large company acquires promising small company, which gets lost as large company pursues initiatives more in line with its original purpose (Uber is now engaged in logistics management as well as taxi-like services). Big company then shuts down smaller company.
Our guess is that Drizly stood a good chance at profitability as a standalone company. But as part of a larger company, it had to carry its share of the parent company's overhead as well as Drizly's, and as a result was either unprofitable or not profitable enough.