There are many ways to enter a growing market or a new category. Some founders might come up with a new product, and others might dream up new retail experiences. Spirited Away founder Douglas Watters chose the latter, opening one of the first booze-free bottle shops in New York City.
As is often the case in entrepreneurship, the seed for Spirited Away stemmed from a personal problem. Douglas didn’t have any one place he could buy non-alcoholic wines, beers, and spirits in-person. “I wanted that experience of going to a neighborhood bottle shop and browsing a curated selection,” he says.
Douglas learned many lessons by starting a retail-first business, and that experience helped him build the brand online.
Observing the emergence of new brands
Douglas assumed that if he was having trouble finding non-alcoholic drinks in stores, other New Yorkers probably were, too. He also figured that the growth of new brands and products in the non-alcoholic beverage industry meant customers would be curious to try them.
Companies like Seedlip, Kin Euphorics, and Ghia were launching more products nationwide. “That was a pretty good indication for me that there was indeed robust consumer demand, and that that could be applied to a brick-and-mortar retail store,” Douglas says.
Educating customers to make the sale
Douglas’s hunch was correct. Customers were interested in the emerging category, and often didn’t know where to start. “We’re much more about education and discovery than a traditional bottle shop is,” Douglas says.
His team of sales associates lead tastings and help match customers to products that meet their needs. “Starting with a retail store has been the best way for me to get grounded in the industry and become, in many ways, an expert on consumer preferences and desires,” he says.
Navigating tricky vendor arrangements
In the early days of Spirited Away, sourcing product was a figure-it-out-as-you-go endeavor. Non-alcoholic drinks were not governed by the same laws as alcohol, so there wasn’t the infrastructure of distributors to rely on.
“I was ordering product directly from the brands themselves, which is great from a perspective of saving costs, but it also adds a lot of headache and a lot of operational and financial confusion,” Douglas says. Many brands didn’t even have wholesale pricing or a wholesale strategy. But in placing a few orders, Douglas was able to develop good relationships with the brands.
Investing in local sales
Douglas wanted to focus on his local community. As a result, Spirited Away doesn’t ship beverages, and customers can’t order online—they either have to come pick it up in-store or pay for local bike delivery. This helps simplify inventory management and lets Spirited Away continue prioritizing its New York audience while letting the brands handle the direct-to-consumer online sales themselves.
Building a directory
Douglas hopes to use what he’s learned building Spirited Away to expand the business. “With Spirited Away, my focus was solving a problem that I knew I could solve before scaling and taking on bigger problems,” Douglas says.
He’s currently on a year-long around-the-world trip, learning about different drinking cultures and alcohol alternatives in different regions. This research helps Douglas create content for Spirited Away’s sister website, Dry Atlas, a directory of more than 1,000 non-alcoholic beverages. “I’ve seen a much bigger and more global need for that education,” Douglas says.To learn more about Douglas’s experiences building Spirited Away, listen to his full interview on Shopify Masters.