Drizly, one of Boston’s successful start-ups, recently faced a downfall despite being bought by Uber for $1 billion. Initially, it aimed to serve as an online alcohol delivery service, paving the way for liquor stores to increase their sales.
In 2013, Justin Robinson, a Boston College graduate, was involved in the launch of Drizly. He aimed to create a user-friendly marketplace app that could digitally display the inventory of local liquor stores, allowing clients to order and confirm sales. Eventually, Drizly managed to collaborate with thousands of alcohol stores across the country with its unique business model.
By 2021, Uber Technologies purchased the start-up for a substantial amount in order to broaden its alcohol sales in its food delivery sector. Nonetheless, the dream of building a solid local consumer brand, initially conceived in a BC dorm room, did not survive in the corporate world.
Uber announced that Drizly’s services will be shut down by the end of March. This decision will result in job loss for hundreds of people, including 168 in the Boston area. Uber Eats is set to integrate Drizly’s technology and client base and will become the company’s only alcohol delivery platform.
Questions have arisen regarding Uber’s abrupt decision to provide a massive investment only to subsequently shut the service down. Certain speculations suggest whether this was Uber’s strategy all along – to remove competition.
However, not all experts agree. According to Florian Ederer, an economics professor at Boston University, the Drizly acquisition followed a similar path to many failed deals in tech, known as ‘capture and kill.’ However, he suggests that the Drizly deal doesn’t fit into this category, as Uber might have seen potential in its customers and tech, despite any desire to eliminate a future competitor.
Unfortunately, the shut down for Drizly means loss for customers who require swift alcohol delivery. They will have limited choices and tend to overspend in comparison to what they paid last summer. Even competitors like Instacart and DoorDash deliver alcohol in Massachusetts, but with a more narrow selection of stores.
As for Drizly’s future, customers will be redirected to order alcohol on Uber Eats after the app closes down. Uber’s decision leaves a string of unanswered questions, particularly around their billion dollar investment and subsequent dissolution.
