Can Digital ID Keep Up With Online Liquor’s Sales Boom?

Securing alcohol is one of the grand adventures of life, especially if a person is younger than the legal age to buy. That’s not to put a romantic spin on an illegal and often dangerous activity, but how many of us have stories from high school about swiping some schnapps from Daddy’s basement bar, or fooling the liquor store clerk with a fake ID?

Well, digital commerce and payments present a new opportunity for such stories and memories – and new challenges and dangers for beer, wine and liquor merchants looking to grow and thrive. As online food delivery services proliferate amid the battle for customer loyalty, and as grocery and related stores strive to gain more digital footholds, the online sale of alcohol is growing and becoming a bigger part of all those plans.

For those plans to succeed, however, a robust system of digital ID is necessary, lest regulators and parents decide such a retail activity is unsafe for children, and take steps to pull it back. Indeed, that was the message this week from Philipp Pointner, chief product officer at authentication services provider Jumio, during an interview with PYMNTS.

First, he wants people to know what the growth of online alcohol sales really means, so no one carries around misconceptions. “It’s not really about someone buying a whole keg of beer or multiple bottles of booze to deliver to the house,” Pointner said. “It’s more about the occasional kind of consumption that comes with food delivery. People really like to have that beer to go along with their food.”

Delivery and Booze Trends

Online food delivery is in the midst of what might one day be called a golden age. A recent report from UBS, in fact, estimated that the global online food ordering market will increase 20 percent annually until 2030, reaching $365 billion. Cheaper deliveries and adults who cook less than previous generations are among the main factors behind that growth.

At the same time, online alcohol sales and delivery – a retail activity that has had significant missteps and false starts since the beginnings of eCommerce, and one that is still hampered by various state and local laws — seems to be hitting a stride (or, at least, getting near that point). Overall alcohol sales might be slowing, but the online channel is one of growth for beer, wine and liquor merchants.

According to one estimate, online alcohol sales in the U.S. reached $1.7 billion in 2017, with grocery stores poised to become the main driver of those transactions. Globally, online alcohol sales will increase at an annual compound growth rate of 2 percent through 2025, according to another estimate, driven in part by a greater demand for “premium/super premium products” – which, when it comes to alcohol, are for many consumers easier to buy online than inside local stores.

As debate rages over the drinking habits of millennials – they are not so young anymore, and are approaching their peak earning years – online alcohol service provider Drizly is eyeing more growth, Instacart is expanding its own alcohol delivery services, and supermarkets, other retailers, beer companies and software providers are getting into the game.

Biometrics Role

For Jumio’s part, it is betting on biometrics, and using technology and lessons that have brought more age verification confidence to providers of online gambling and e-cigarette eCommerce. Underage consumers are often clever enough to fool even digital authentication checks (granted, some are rudimentary and even meant to be tricked, as per the wishes of shady operators), but technology is making that harder.

In Jumio’s case, the authentication effort comes down to ID data points, biometrics and computer intelligence. A consumer who tries to make an online purchase of beer, wine or liquor might be asked to prove their age by – depending on the retailer – submitting a scan of their driver’s license, for instance, or entering the last four digits of their Social Security number, with that merchant then doing a background check.

Jumio’s authentication technology asks for those ID details and requests that the shopper submits a selfie. That provides another layer of proof that the consumer is who they say they are – not a parent, grandparent or an older, ne’er-do-well uncle, cousin or friend.

Minors will always try to game the system, Pointner told PYMNTS, and stopping that will require cultural changes. But technology can guard the digital gates against such attempts, and save some of the smaller alcohol merchants the trouble of developing their own in-house systems, the costs of which can be prohibitive unless the company was “born online” – which applies to those food delivery service providers – or is a big chain, he said. “The more specialized wine shops will probably have more difficulties,” as will the smaller craft brewers.

Preempting More Regulation

The stakes of getting this right are significant, Pointner said. Online sales of alcohol is still in its infancy, with models and processes still be tested. And those sales have not yet attracted too much mainstream attention – a sign of how young this retail sector is – but as this part of online commerce grows, regulators and parents are sure to pay more attention to it. Mistakes when it comes to age verification – or the type of looseness that gets retail clerks ticketed by police stings – will surely serve to act as a brake on growth. “This needs to be taken very seriously,” Pointner said.

In general, digital IDs – those documents that are the primary ways citizens identify and authenticate themselves, such as drivers’ licenses – are spreading across the world, but there is massive work to be done before they become common enough to, perhaps, serve as a way for buyers to prove their ages when buying booze online. But that’s more than a few years in the future. For now, sellers of those products need other ways to make sure they do not provide alcohol to underage consumers via online channels.