One thing Birmingham startups do well is turn hurdles into windows of opportunity.
Local startup Dippi adapted to an unexpected roadblock that challenged the company’s entire business model by turning it into a seemingly profitable pivot.
Dippi’s original business model included bringing spirits to customers’ doorsteps while providing data to alcohol companies using ID verification systems and personalized driving and training programs to enable companies to get data more quickly.
The business model was banking on the Alabama Alcoholic Beverage Control Board allowing state-run package stores to deliver alcohol. When Gov. Kay Ivey signed the Alcohol Delivery Bill into law in 2021, it allowed businesses licensed by the ABC board to deliver limited amounts of alcohol. Since state-run ABC stores are governed but not licensed by the board, however, ABC stores cannot offer alcohol delivery, a rule that was set to change in spring 2021.
The ABC Board submitted a request for proposal to solicit bids from contractors to deliver alcohol from their state-run stores. Dippi CEO Rashad Grimes hoped to win and gain exclusive access to ABC stores across the state, allowing Dippi to offer less-costly delivery than alcohol from private package stores, enabling the company to scale quickly.
While waiting, Dippi delivered from private package stores.
“The conundrum became, our company could not properly scale because if you’re getting alcohol at a higher amount than what you could get (from ABC), by the time you add fees, the only people who were really using our services were people that had an extremely high amount of disposable income,” Grimes said. “If it’s not the cheapest price possible, nine times out of 10, they won’t get it delivered and will just go to the store themselves.”
While working to get Dippi off the ground, he learned that while Alabama businesses can have wine and beer delivered by distributors, they are required to pick up their own liquor from ABC.
“So what that means is if you’re Top Golf, if you’re Marriott International, Texas Roadhouse, every time you need alcohol, you have to send one of your employees to go get the alcohol,” Grimes said.
Businesses in the state can, however, send an authorized agent to pick up the alcohol.
“And what if Dippi could be the authorized agent for every company,” Grimes said.
Fast-forward to October 2022 and Dippi was serving as a complete B2B alcohol delivery service.
“When you have money, you kind of can’t sit still,” Grimes said.
Its partners include Marriott International, Hilton, Texas Roadhouse, Darden, Taco Mama, The Cheesecake Factory, Hoover Country Club, Birmingham Country Club and Grand Bohemian Hotel and Capital City Club Montgomery.
Dippi aims to add value with this new model by eliminating liability for companies that comes with sending their employees to pick up alcohol and freeing up the companies’ managers and other high-ranking employees who would normally have to go pick up the alcohol.
“My goal is to scale this as high as I can,” Grimes said. “I will add a technology component once we get to a certain amount of customers and then I may seek VC capital to be able to do so but right now, Dippi is self-sustaining. We’re experiencing rapid growth month over month.”
In 2023, he hopes to have contracts with 10% of the businesses within the market in the state, negotiating exclusive contracts with these businesses.
The company currently has four employees and 10 contract drivers, with plans to add more drivers in 2023.
“I would advise all entrepreneurs, especially in the startup world, in the early stages of their business, to look at business like a marathon,” Grimes said. “Focus on numbers. Focus on adding value to the customer. As long as you are focused on adding value, and you find a pain point, and you find the right niche area, you can work on scaling and kind of go from there. A lot of times we get caught up in just the glamour of being an entrepreneur and we lose sight of what matters the most.”
