How to Start an Online Alcohol Business
Ever thought about starting your own alcohol business? Take advantage of the spike in online shopping, and read this guide to find out how to start an online alcohol business.
An online alcohol business has become a popular means of selling alcohol, whether for established vendors or keen entrepreneurs. This of course has been supported by the recent COVID-19 pandemic forcing us out of stores and back into our homes.
This guide will go into some of the key requirements in starting an online alcohol business. We’ll first cover the need for a plan, before diving into key considerations relating to your product, platform, and promotion.
Whether you are nervous or uber-excited about starting your own business, it’s always good to start with a plan. You may already be selling alcohol in a ‘bricks and mortar’ setup. If so, you’ve probably already got a foundational business plan, and we recommend you skip to the next section of this guide.
If this is your first business however, you should really take the time to make a business plan, including details of your preferred business structure, your market, your goals, and your finances. We’re going to go into a bit more depth on three things that will be at the core of a plan for starting an online alcohol business: product, platform, and promotion.
Once you have a plan, a good place to start implementing it is sourcing your product. Should you produce your own alcohol? Should you partner with a supplier? The answer to these questions really depend on the type of business you want to run. As a broad guide however, there are two key avenues to consider.
In making your own alcohol, there are a few major things you should take note of. Firstly, you need to have the physical capital for production to start your own brewery, winery, and/or distillery. You should also look into patents for ingenious recipes or production processes you come up with to prevent others from using it without your licence to do so. Finally, there are a couple key regulatory requirements you need to comply with. Firstly, you may need to have a liquor licence to store and supply your alcohol (even if you don’t have a storefront). Secondly, as a producer, the key taxes you should be aware of is excise duty, the wine equalisation tax, or both.
Sourcing your alcohol from overseas suppliers can certainly give you an ‘exotic’ edge in the market. However, there are a few major things you should take note of. Firstly, you’ll need to think of shipping/freighting and storage. You may look into warehousing yourself, or look for a freight forwarder to do it for you. Also, as the product is not produced by you, you need to think about a distribution agreement with the supplier. Finally, there are a couple key regulatory requirements you need to comply with. Firstly, you still need to have a liquor licence to store and supply your alcohol. Secondly, as an importer, you will need to have an import permit to clear your alcohol in customs (this can be handled with your freight forwarder). You should also note that if you repackage the alcohol (say, for branding purposes), you may also need to pay excise duty.
The next thing to consider is your online platform. The good news here is that this is a way cheaper alternative to operating a bricks and mortar storefront. The not so good news is that there are still some key regulatory requirements you should be aware of.
When selling alcohol, there are signs you need to put up which signal the importance of responsible sale and consumption of alcohol. While these requirements differ from state to state, we’ll focus on NSW as it includes new signage requirements for online sellers. In NSW, selling alcohol online typically requires a packaged liquor licence (see ‘Product’ section above). As such, there are two mandatory signage requirements you should be aware of: packaged licence signage and web-based liquor businesses signage.
You should also think about the policies of your preferred online platform. For example, Facebook and Instagram prohibit the buying and selling of alcohol on their platforms under their Commerce Policies. However, eBay oddly enough, permits the sale of alcohol on its platform subject to certain requirements under their Alcohol Policy. Shopify prohibits the use of their Payments Service by certain businesses in their Payments Terms of Service. While alcohol is not specifically mentioned, you should check it out to ensure your business is not excluded.
Thirdly, as a fairly new business model, changes to the law are super important for selling alcohol online. NSW has introduced some laws targeting the delivery of alcohol as part of its 24-hour economy liquor reforms. Additionally, Victoria has been pushing for similar reforms targeting online sale and home-delivery of alcohol. In NSW, the reforms include new offences for delivering alcohol to minors, as well as identity checks for same-day deliveries. These specific reforms are effective from the 1st July, 2021. However, you should keep an eye out for further developments in this area!
When it comes to branding and promoting your product, you’ll probably need to think about a logo and the design of your packaging. You will also need to consider web design for your online platform and promotional materials (e.g. advertisements). If you think yourself quite design-savvy, you can create these things yourself. Alternatively, you may wish to think about contracting designers to help you out. Starting a business with Lawpath actually includes partner offers which may help you out here! Additionally, you may wish to trademark your branding material to prevent others from using it without your licence to do so.
In summary, starting an online alcohol business, while exciting, is not a shortcut to commercial success. It is an alternative avenue with its own challenges. Key things to think about are your business plan, where you get your product from, the online platform you want to sell from, and the promotion of your business. These of course aren’t the only things to consider, but they’re certainly some of the big ones. So start grinding away on these things, and you’ll probably start figuring out your specific business needs, for which, of course, we are always here to help with!
Beulah is a Legal Tech Intern at Lawpath. He is in his final year at the University of Technology Sydney (UTS). He is interested in disruptive technologies in the legal industry and intellectual property law.