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Thread: Self Distribution App

  1. #1
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    Self Distribution App

    Interesting idea for a new app.

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    A Revolution in Self-Distribution
    With the number of smaller alcohol manufacturers on the rise many States have eased up on the three tier distribution laws, allowing self-distribution. Opentapp is designed to allow smaller manufacturers and retailers to capitalize on self-distribution by networking, utilizing location services and e-commerce to allow direct transactions between retailers and manufacturers.

    See more here: www.opentapp.com
    Cheers!
    Banjo Bandolas
    Director, Advertising Sales
    Real Beer Media
    v- 541-284-5500
    banjo@realbeer.com

  2. #2
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    Sneak Peek coming soon.

    Check out our site and follow our social media pages and we will give you guys a look at the app in about a week or so.

  3. #3
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    I would like to hear what feedback you've gotten from retailers. Especially how they feel about paying 3-5% more for beer. Thanks!

  4. #4
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    Quote Originally Posted by Floor Malted View Post
    I would like to hear what feedback you've gotten from retailers. Especially how they feel about paying 3-5% more for beer. Thanks!
    Thanks for the question! So far none of the retailers we have spoken with have voiced complaints about the transaction fee. We are constantly pinging tap houses and bars for feedback and will be sure to ask them specifically about the transaction fee.

    When retailers decide to buy using Opentapp it exposes them to quality local beer at competitive pricing. Why? Because self-distribution gives us small brewers the room to be competitive. Instead of having to try and cover our bottom line while surrendering %30 of our profits to a distributor we can offer better quality beer at prices that will beat out import and “premium” beers. That alone should more than cover the %3 percent they pay for regular orders (%5 percent is for the Same Day/On Demand transactions). I know that our brewery's self-distribution plan will offer retailers in our local market the ability to buy our beer cheaper because sweetening the deal will gain us ground on our home turf quickly and that is our most important market.

    If you look at the history of brewing in the U.S. you can see we aren’t even close to slowing down the growth of small manufacturers. We just hit the same amount of breweries we had before the great depression, A time when we only had 40 million people in this country. We now have a population of 300 million. That leaves a lot of space for independent manufacturers who will continue steadily swiping the beverage market from large manufacturers. Its not just beer, its Liquor, Cider, Wine, Mead, pretty much any and all alcohol types are starting to shift to local craft production. With this explosion of manufacturers bar owners and managers won’t want to order products using twenty different order sheets and deal with the corresponding phone calls, emails, and accounting info. Its like running another business for both the brewers and retailers. The amount of man hours Opentapp will save alone will be worth the money ten fold. Retailers can order from any independent manufacturers in one place, at one time.

    We decided to have brewers pay a low monthly fee because its easy for fellow brewers to see why the app would be advantageous and because having to pay a transaction fee for every contract that orders from them is too costly and unrealistic. We chose the transaction fee for retailers because we want them to be able to download the app for free to explore its options. Its harder to explain to retailers the ins and outs of self-distribution so we don’t want them paying a monthly fee for something they don’t necessarily fully understand. In doing this the app will advertise itself. We figured paying a transaction fee roughly four times a month on a fraction of their beer order (we understand they will still use large distributors) is fairly reasonable once they decide to use the app. Also it allows them the option to fill taps on demand which is what we get the most positive feedback on.

    As soon as we hear back from retailers regarding the fees we will post it. Thanks again and keep the questions coming!

  5. #5
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    This is a joke right? The problem with this business model is that depending on the state, distributors and wholesalers have agreements in any particular area as well as agreements within importers. You're going to have a real tough time convincing bars to "let you on any tap" with them depending on other brands that people want. The whole issue has been tap space - how do you get on more taps in an area with everyone competing for limited tap space.

    Self distribution is the ticket to keeping maximum profits but I know that in many states, it's the only want to survive but I'll be darned if I'm going to get an app for it or pay someone else for that. Again, it comes down to how open the bars/pubs/restaurants are going to be with a newcomer compared to the pricing power of distributors and wholesalers. The best way to maximize profits for a start-up...is not to be a distribution brewer (unless you can afford a much bigger facility)...but be some distribution but focus on tasting rooms. Because in the end, until you have economies of scale, you're going to struggle with just being a production brewery. You need sales that don't involve a middleman....tasting rooms do that - plus they are a way of getting reviews of your beer.


    Bottom line is you need to produce a damn good beer and in a style that people want/demand....and for distribution - a bar/pub/restaurant willing to give you tap space...again, it better be a damn good beer or they'll never take a chance on you again...you cost them money.

  6. #6
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    Quote Originally Posted by Hefe View Post
    This is a joke right? The problem with this business model is that depending on the state, distributors and wholesalers have agreements in any particular area as well as agreements within importers. You're going to have a real tough time convincing bars to "let you on any tap" with them depending on other brands that people want. The whole issue has been tap space - how do you get on more taps in an area with everyone competing for limited tap space.

    Self distribution is the ticket to keeping maximum profits but I know that in many states, it's the only want to survive but I'll be darned if I'm going to get an app for it or pay someone else for that. Again, it comes down to how open the bars/pubs/restaurants are going to be with a newcomer compared to the pricing power of distributors and wholesalers. The best way to maximize profits for a start-up...is not to be a distribution brewer (unless you can afford a much bigger facility)...but be some distribution but focus on tasting rooms. Because in the end, until you have economies of scale, you're going to struggle with just being a production brewery. You need sales that don't involve a middleman....tasting rooms do that - plus they are a way of getting reviews of your beer.


    Bottom line is you need to produce a damn good beer and in a style that people want/demand....and for distribution - a bar/pub/restaurant willing to give you tap space...again, it better be a damn good beer or they'll never take a chance on you again...you cost them money.
    Nope, we are dead serious!

    When you talk about agreements they usually have to do with manufacturers that decide to use distributors and sign a distribution agreement. These agreements can state the distributor will be the sole entity to distribute a manufacturers products to certain areas or have exclusivity on a certain product line or everything that a manufacturer produces. These depend on what the distributor and manufacturer agree on. Distribution has its perks especially when we are dealing with another city, county, or state. Going the distance can get costly so it might make sense for breweries who self-distribute to use distributors to do the long distance work and focus their self-distribution efforts closer to home. Most of these deals will have some sort of legally binding agreement. We recommend anyone choosing to use distributors thoroughly review any proposed agreement. However our application is for breweries who self-distribute.


    Tap space is defiantly a battle ground. Taps are coveted podiums that manufacturers compete for and try as they might, bars, clubs, and restaurants will fail to complete a perfect beer order every time. How do we know? We have asked every bartender in any tap house, bar, pub, and restaurant we have entered to test the appeal/feasibility of the app. It turns out that running out of beer is not only common, but a large source of complaints by patrons. Try calling a distributor at 8PM and asking them for three kegs to hold your establishment over for the night. If they come through give us their number please. If not, try Opentapp. A hungry local brewer will go the extra mile to keep beer flowing and own that tap space. As a brewer I see an On Demand order as an opportunity to promote my beer and hopefully earn a permanent presence in that bar. Craft retailers that feature rotating taps/bottles can really benefit from Opentapp. Managers can populate their taps with local beers in five minutes.

    Distributors can and do handle promotions for manufacturers. They gain new contracts by offering incentives to bars, sponsoring events to bring in crowds, and of course tossing out free schwag. When manufacturers decide to self-distribute they have to take on a lot of the promotional duties. Opentapp won’t be able to absolve self-distributors of these duties however we want to make ordering from multiple self-distributing manufacturers as easy as ordering from one standard distributor. We also think our same day and On Demand orders (mentioned above) will give brewers a foot in the door which will alleviate some of the promotions needed to gain new tap positions.

    We get that you don’t want to surrender any of the profits you gain by self-distributing and we are not trying to replace distributors at a lower rate. We are simply a utility for use by self-distributing breweries. We offer a universal order sheet, keep inventories, handle transactions and provide records of the transactions, and allow manufacturers to coordinate deliveries with ease. On top of that we also offer free advertising to anyone who uses our app. If you have tried to purchase advertising space you know expensive it can be. We, on the other hand, will not break the bank. Our monthly rate is 5.99, so if the manufacturer sells one pint of imperial IPA or a Bourbon Barrel Stout they have broken even.

    Retailers have the advantage of ordering all of the local fresh beer (or craft spirits) in one place and at one time. The app will filter out manufacturers that don’t deliver to their location saving time. Retailers can set up reoccurring orders as well. Lets say a retailer orders 10 1/6th barrel kegs at $150 each. A $1500 order would cost $45. So the price of one custom tap handle, or one or two bar/restaurant checks. Not very much money considering the bar could order 2 kegs from five different manufacturers, get a delivery schedule, and get free advertising through us as well.

    All brewers strive to make delicious beer. We dedicate long nights in our garages, backyards, kitchens or staying late at the brewery to experiment, tweak, and of course test our new creations. Our beer should sell itself. I totally agree with you there. What we want to do is provide brewers a standardized, simple, fast, and frugal way to handle orders and coordinate deliveries with their customers/contracts so rather than having to dedicate time to distribution they can focus on what they love best, making that delicious beverage we love so much.

    Thanks for the comment keep it up guys! We are still developing this so if you have valuable input we will take it on board.

  7. #7
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    Question

    Let me pose a question to you guys. Do you feel a flat rate transaction fee would be more attractive to retailers than charging a percentage of their purchase? Our theory behind the percentage is that weekly keg orders wouldn't be large and therefore would keep the transaction fee low. That being said, what does a normal keg order look like from your biggest contracts? How many kegs does your average contract go through a week? Please specify if you are in a rural or urban location.
    Last edited by Opentapp; 11-11-2015 at 08:08 AM.

  8. #8
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    Quote Originally Posted by Opentapp View Post
    Let me pose a question to you guys. Do you feel a flat rate transaction fee would be more attractive to retailers than charging a percentage of their purchase? Our theory behind the percentage is that weekly keg orders wouldn't be large and therefore would keep the transaction fee low. That being said, what does a normal keg order look like from your biggest contracts? How many kegs does your average contract go through a week? Please specify if you are in a rural or urban location.
    The brewery is the one really receiving the benefit from a product like this. That being said, the retailer should not be paying to use this. Look at Amazon.com for example. When you buy something Amazon doesn't throw on an additional 3% for using their marketplace. Instead they take a little piece off the sale from the seller. Lets say I was planning on selling a keg of beer for $150 but drop the price to $145.50 to accommodate for the retailers transaction fee. I would still be that brewery that charges a fee to purchase beer.

    I think the amount of beer an account is irrelevant because 3%=3%=3%.

  9. #9
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    Quote Originally Posted by Floor Malted View Post
    The brewery is the one really receiving the benefit from a product like this. That being said, the retailer should not be paying to use this. Look at Amazon.com for example. When you buy something Amazon doesn't throw on an additional 3% for using their marketplace. Instead they take a little piece off the sale from the seller. Lets say I was planning on selling a keg of beer for $150 but drop the price to $145.50 to accommodate for the retailers transaction fee. I would still be that brewery that charges a fee to purchase beer.

    I think the amount of beer an account is irrelevant because 3%=3%=3%.
    So if we were to put the burden of the transaction fee on the manufacturer what would you suggest per transaction? Also would you agree that most brewers that self distribute offer competitive pricing anyways?
    Last edited by Opentapp; 11-14-2015 at 09:42 AM.

  10. #10
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    Quote Originally Posted by Opentapp View Post
    So if we were to put the burden of the transaction fee on the manufacturer what would you suggest per transaction? Also would you agree that most brewers that self distribute offer competitive pricing anyways?
    I would say a transaction fee of 5% per order max and no subscription fee. I am confused about the ordering process through this app. I copied this from your website.

    A bar runs out of beer on one of their rotating taps

    They post an order or "vacancy" on Opentapp's on demand order section. If the order is time sensitive, the establishment can set a time limit. The application allows the establishment to place specific orders like "four 1/6 barrel kegs of IPA" or "case of bourbon" or a simple request for any type of beer. Opentapp allows selections to be made according to alcohol and packaging types. If the retail location falls within the manufacturers radius and is requests a product that the manufacturer produces, a message is sent to that manufacturer.



    As far as a retailer placing an order for beer, are they able to order more specifically than "four 1/6 barrel kegs of IPA?" Could you explain why a retailer would want to put in a request for a beer style and wait for a response rather than ordering from a list of available beers?

    In my area, no, I do not see self-distributing breweries offering beer for less money than breweries that use a distributor. Beer from self-distributing breweries is usually more expensive. But, I'm in Indiana so it may be different where you are.

  11. #11
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    Quote Originally Posted by Floor Malted View Post
    I would say a transaction fee of 5% per order max and no subscription fee. I am confused about the ordering process through this app. I copied this from your website.

    A bar runs out of beer on one of their rotating taps

    They post an order or "vacancy" on Opentapp's on demand order section. If the order is time sensitive, the establishment can set a time limit. The application allows the establishment to place specific orders like "four 1/6 barrel kegs of IPA" or "case of bourbon" or a simple request for any type of beer. Opentapp allows selections to be made according to alcohol and packaging types. If the retail location falls within the manufacturers radius and is requests a product that the manufacturer produces, a message is sent to that manufacturer.



    As far as a retailer placing an order for beer, are they able to order more specifically than "four 1/6 barrel kegs of IPA?" Could you explain why a retailer would want to put in a request for a beer style and wait for a response rather than ordering from a list of available beers?

    In my area, no, I do not see self-distributing breweries offering beer for less money than breweries that use a distributor. Beer from self-distributing breweries is usually more expensive. But, I'm in Indiana so it may be different where you are.

    This is the process for ordering beer same day or on demand. If they were in need of beer to help plus up a lacking beer inventory retailers have the option to be as vague or as specific as they want. The less picky they are about the beer they need the more likely they will find a manufacturer in their area that will deliver within a few hours. There will be a menu that offers retailers the ability to order specific brands and packaging types for regularly scheduled deliveries. We are still researching which payment options are sustainable and beneficial to both sides but your information is much appreciated and we will defiantly consider your suggestion. Thanks for your time and keep the questions and comments coming they make a difference!

  12. #12
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    Quote Originally Posted by Opentapp View Post
    This is the process for ordering beer same day or on demand. If they were in need of beer to help plus up a lacking beer inventory retailers have the option to be as vague or as specific as they want. The less picky they are about the beer they need the more likely they will find a manufacturer in their area that will deliver within a few hours. There will be a menu that offers retailers the ability to order specific brands and packaging types for regularly scheduled deliveries. We are still researching which payment options are sustainable and beneficial to both sides but your information is much appreciated and we will defiantly consider your suggestion. Thanks for your time and keep the questions and comments coming they make a difference!
    That makes sense about the same day delivery.

    Another thing to consider as you choose payment methods is how breweries are going to sell this product to retailers. Right now (at least from what I see) you are selling this to breweries. Breweries will then have to sell this to retailers. Only then will you start making real money.

    Lets say XYZ Brewing Co. has been in business for a year now distributing kegs and bottles to 30 retailers. Currently they send an email every week to retailers alerting them of available stock. The retailer then emails the brewery back outlining what they like. The brewery then delivers and the retailer is invoiced.

    Now, XYZ wants to have each of its customers switch to Open Tapp and start paying 3% more for the same beer they bought last week. Why would the retailer switch?

    Looking forward to the update coming later this week!

  13. #13
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    Quote Originally Posted by Floor Malted View Post
    That makes sense about the same day delivery.

    Another thing to consider as you choose payment methods is how breweries are going to sell this product to retailers. Right now (at least from what I see) you are selling this to breweries. Breweries will then have to sell this to retailers. Only then will you start making real money.

    Lets say XYZ Brewing Co. has been in business for a year now distributing kegs and bottles to 30 retailers. Currently they send an email every week to retailers alerting them of available stock. The retailer then emails the brewery back outlining what they like. The brewery then delivers and the retailer is invoiced.

    Now, XYZ wants to have each of its customers switch to Open Tapp and start paying 3% more for the same beer they bought last week. Why would the retailer switch?

    Looking forward to the update coming later this week!
    My guess is that the brewery would eat the 3% as a measure of convenience for not having to place calls and emails once their customers are on and accustomed to the system.

    It sounds a little complicated at this point, IMO. Of course part of that is due to the fact that the role out has not begun and details are still being hammered out. I wonder, though...can you (opentapp) provide examples of an application similar to this used in another industry?

  14. #14
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    Update

    http://www.opentapp.com/opentapp-for-manufacturers.html

    Check out our website under the manufacturers section. We put up some screen shots of the app.

  15. #15
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    Quote Originally Posted by wlw33 View Post
    My guess is that the brewery would eat the 3% as a measure of convenience for not having to place calls and emails once their customers are on and accustomed to the system.

    It sounds a little complicated at this point, IMO. Of course part of that is due to the fact that the role out has not begun and details are still being hammered out. I wonder, though...can you (opentapp) provide examples of an application similar to this used in another industry?
    In order to operate an app with the features provided by opentapp there has to be some fees. The cost of interfacing an app with multiple operating systems as well as selling these applications via the operating system's application marketplaces can be extremely expensive. Our goal is to make this application extremely convenient and affordable to use. If we decide to use either a transaction fee or a subscription fee or any combination of those or other types of fees you can rest assured our goal is to make the cost far below the cost of choosing to go with a distributor. We will also make sure that the time the application saves you will more than cover the small cost.

    It is tough to find an application that resembles ours. Because of the legal conundrums created by the alcohol laws in this country our application is some what unique. Without getting too far into the weeds (we still want to maintain some secrecy because we are in development)
    I would say we are similar to a mix between amazon and craigslist because we offer a standardized way of ordering products that ensures safe transactions (like amazon) while filtering retailers and manufacturers using location services (craigslist). However unlike both examples we serve the manufacturer - retailer relationship and while we don't handle the physical delivery we arrange and track it which differs from craigslist.

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