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Complexities of Selling BevAlc Online with Yoni Reisman and Jay Liddell - Honest Ecommerce Ep. 168

In Yoni and Neal’s previous lives, they were music industry veterans behind some of the largest festivals in the country. 

Along the way, they saw the demand for quality cocktails growing, but the careful preparation required to make one made service in high volume environments pretty difficult. 

They fantasized about creating a world-class cocktail in an easy-to-serve vessel, thinking maybe they could help solve a problem for venues, events, restaurants, bars, airplanes, and regular folks at home on the couch. 

Eventually, they stopped fantasizing and started actually doing it.

Enlisting the help of their favorite bartender and James Beard finalist, Miles Macquarrie of Kimball House, they, along with Jay, developed classic cocktail recipes and packaged them up to drink at any time and, just about, any place. 

Tip Top Proper Cocktails are always within reach, especially if a trusted bartender or fully-stocked bar are not.

In This Conversation We Discuss: 

  • [00:00] Intro
  • [01:21] What are Tip Top Proper Cocktails?
  • [02:11] The connection between live music and Tip Top
  • [04:47] Challenges in serving alcohol to festival goers
  • [06:53] The opportunity in inefficiencies
  • [08:14] BevAlc is profitable yet complex in the US
  • [10:21] Milestones that Tip Top reached
  • [12:35] What is a co-packer in the BevAlc space?
  • [13:01] From concept to shipping products
  • [13:45] Tip Top’s D2C go-to-market strategy
  • [15:39] The complex process of selling Bev/Alc online
  • [16:32] Sponsor: Electric Eye electriceye.io
  • [16:52] Sponsor: Mesa apps.shopify.com/mesa
  • [17:36] Sponsor: Gorgias gorgias.grsm.io/honest
  • [19:02] Sponsor: Rewind rewind.com/honestecommerce
  • [19:30] Sponsor: Klaviyo klaviyo.com/honest
  • [20:18] Dealing with varying state legislation
  • [21:53] Tip Top’s partnership with Delta Airlines
  • [25:42] Things that Tip Top did to increase online sales
  • [28:14] Making sure CX is smooth as possible
  • [30:12] Where to find Tip Top Proper Cocktails

Resources:

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 Transcript:

Chase Clymer  

Before we get started, if you're enjoying this content, you can do us a favor by subscribing to our YouTube channel and ringing the bell.

That will let the algorithm know that you like this content and it will help us produce more.

Jay Liddell  

We look at it as more of drawing people to our site, so that they'll be redirected as more of a marketing top funnel activity.

Chase Clymer  

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. 

On this podcast, we interview founders and experts who are putting in the work and creating real results. 

I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.

Let's get on with the show.

Hey, everybody, welcome back to another episode of Honest Ecommerce. I'm your host Chase Clymer. And today, just quickly, I'm gonna love... 

I love the new software we're using to record the podcast that makes it so much easier to have co-founders on the show. 

So today, I have 2 guests, actually, not just one. Today I'm welcoming Yoni and Jay. They're coming to us from Tip Top Proper Cocktails.

So welcome to the show, guys. How are you doing today?

Yoni Reisman  

Fantastic. Thank you. 

Jay Liddell  

Great.

Chase Clymer  

Awesome. So for the listeners that are unaware, who wants to give us a crash course and what the product actually is so we can have that idea as we discuss the rest of the things today.

Yoni Reisman  

Sure I can, I can do that. We make classic cocktails in tiny little cans. So currently, that's an Old Fashioned, a Manhattan, a Negroni, a Margarita, a Daiquiri, and a Bee's Knees.

Chase Clymer  

With that, something that I think kind of separates you from the crowd and leads you to today's show is you're selling these products online as well.

Yoni Reisman  

We are indeed, online and in traditional distribution, there [are] a ton of interesting challenges that we or that I have learned the very least. Yeah, it's an interesting space.

Chase Clymer  

All right. Well, take me back to kind of what was going on in your guys's lives when this idea came to you. And you decided that you wanted to start slinging drinks, I guess?

Yoni Reisman  

Yeah, I can take that one as well. So my background is in the live music space. I started a festival in New York City called The Governor’s Ball in 2011. And after selling the festival to Live Nation, I was thinking about what was next.

And the idea of being able to serve quality cocktails efficiently in those types of environments is the one that stuck with me. 

So I did a little research, it seemed like a good idea. And dove right in with my friend and partner Neal Cohen. And collectively, I would say, what we're really, really good at is knowing what we're not good at. 

And so we went out and found people much smarter than us. And one of them is Jay here who actually knows the BevAlc space, which we knew nothing about.

Jay Liddell  

Well, I think Yoni's obviously humble as always. And what I love about Yoni and Neal... I'm actually... I was found by the co-founders. 

So Neal Cohen is a co-founder who wasn't able to join us today. But Yoni had the idea, as you mentioned, after selling Gov Ball to Live Nation. 

However, the interesting part is that what they have learned has transcended the BevAlc space. So I think, obviously, in the world of selling concert tickets and festival tickets, it's all online. 

So what's really, I think a valuable insight and asset for Tip Top in the online space is the fact that they've taken all of their learnings from the festival selling business to apply it to BevAlc. And it's been... 

Just like every relationship. [there are] pushes and pulls but I think it's going to be for the betterment of the cocktail lover out there that wants to find Tip Top online.

Chase Clymer  

What's really funny is I might be the most uniquely qualified person to give this interview with my backstory. I worked a lot in music, I helped start a promotions company here in Ohio, and I sold my... 

I have so many parallels here and I know exactly the frustrations of serving mixed drinks at festivals and I can't... I wish that that was in the pre-interview stuff because I kind of just dove down that rabbit hole. We're gonna get into it now. 

Why is it hard to serve a cocktail at a festival? 

Yoni Reisman  

Well, those types of cocktails require some level of skill, right? And they take time. So our festival is a 3-day event or my old festival was a 3-day event. 

And the people who worked you know, the tents were like a church group, volunteers, or like a fraternity, that... They were not quality mixologists, if you will.

Chase Clymer  

Why couldn't you hire a quality mixologist to do this? Why do you have to get volunteers like that?

Yoni Reisman  

Yeah, it's 50,000 people a day. So we had a lot of tents. So that's in short the answer.

Chase Clymer  

Yeah. Well, isn't there a... Selling alcohol on the side, though, don't you have to partner with some sort of non-profit to be able to do that? 

Yoni Reisman  

Well, we used a concessionaire called Spectrum Concessions. They're quite good, great people. And yeah, they handled all the staffing. So they do events all over the place. 

And so, yeah, they know how to staff folks in New York City and many other cities. It's sort of just a roster they go to.

Chase Clymer  

Absolutely. And they're not only that, but there's  the product cost, there's gonna be a lot of waste at the end of the day, in ordering for an event like that is a full-time job in and of itself, to be honest. 

Yoni Reisman  

Yep. 

Chase Clymer  

So anytime you're adding complexities to the menu, you're adding product cost.

Yoni Reisman  

Exactly right. Even to the point where we decided not to do kegs at all for beer. We went with cans only just because someone can tap a keg and do it wrong. And it's all foam for a while and you lose a bunch of beer and you lose a bunch of time. 

Mostly, when you're selling $7 to $9 beers at a 3-day event. The goal is to do that as efficiently as you possibly can. And keep the lines short. So yeah, that's a whole world, we can go down there.

Chase Clymer  

Okay. So let's... I'm going to snap. So you saw the inefficiencies of making mixed drinks, and just the efficiency of popping the top on whatever domestic or import or craft beer that you happen to have there. And you saw the opportunity.

Yoni Reisman  

Yeah, that's essentially right. And just the thought that my tastes have changed... At that point, I was less into beer, I was more into cocktails. And those options were available in those types of places. And it just generally seemed like a good idea. 

It's one of those ideas of like, "Why hasn't this happened yet?" And the truth is, it has to some degree, they just haven't been very good for a while. And they've thankfully started to get a lot better over the past few years. The rising tide lifts all boats. That's been good to see.

Chase Clymer  

As far as just innovation within the alcohol industry, I would say? 

Yoni Reisman  

Yeah. Exactly right. 

Chase Clymer  

Yeah, I would say that that is probably one of the more traditional industries, when it comes to the way they do business compared to how fast you see innovation in other areas just because of the complexities of the interstate laws and all that stuff. If you... 

You have to really want to take on that challenge, it seems.

Jay Liddell  

Yeah, it's funny in the US, it's the most profitable region in the world for beverage [and] alcohol. 

However, it's also one of the most complex because the rest of the world, a brand owner creates a brand, puts it into a bottle/can vessel and then sells it to a retailer or sells it directly to a consumer. 

But in the US, there are the wholesale tier, the retail tier, and the consumer tier. And then as you mentioned, every single state has slightly different laws about accessibility. 

So if you're in PA, for example, you have to go to specific stores to get your spirits and wine, specific stores to get your beer and have limited access based off of what the state will allow things to be brought into and so on and so forth. 

So, yeah, that's why online and Ecommerce for Tip Top and for the beverage space is one of the most exciting trends that are happening and evolving on a month-by-month basis when it comes to laws, accessibility, consumer adoption, and certainly being propelled by the last 2 years of all of our lives stuck at home.

Chase Clymer  

Oh, absolutely. So I'm in Columbus, Ohio, and we used to not be able to... So we were... Beer delivery was a thing. 

But it wasn't digital until the pandemic and then you could get lower alcohol stuff delivered but we still can't get hard alcohol delivered here and at least here in Columbus. I don't know if it's a city by city thing. But we've been seeing... 

I've been seeing it evolve. 

Yoni Reisman  

Why? 

Chase Clymer  

It's why… And here's the thing. I was looking at this about a week ago. I wanted to deliver a bottle of whiskey to someone that did us a favor and I couldn't. And I was just like "This is so frustrating."

Jay Liddell  

Yeah, I want a bottle of whiskey. Just send it my way. I'm in Chicago, you can send it to Chicago every day. (laughs) Yeah. So it's... Ohio is a what they call a control state. 

So they have agents, retailers... And so the state government runs the show there on how alcohol spirits get purveyed in that particular state.

Chase Clymer  

Absolutely. So you got the idea for the brand... Take me from the ideation of the brand, coming up with the name to launch. 

There's obviously a lot of steps in between in there, especially tiptoeing and following the law as they require in that specific kind of vertical. 

So what were some of the major milestones in that journey?

Yoni Reisman  

I'd say, choosing the name was probably the first on that, as you mentioned. And, Tip Top came... 

I asked a bunch of friends for ideas and one of them said, Tip Top, and I just loved it. 

There's the alliteration. It's fun and easy to say. It's memorable. So it just, it just seemed like a winner. Plus, we could get the trademark for it. And the website, whatnot. So there was that. 

And then I'd say, the design piece as well. That took quite a while. We know, there's no real IP we have around us. There's no moat. 

Anybody could put no fashion in the can so we have to build a brand that people really connect to and not just the name, but how it looks. It's also partly why we chose that very unique can that we're in. 

And then, of course, formulating the actual product itself. We worked with... I'm down in Atlanta, there's a bar here called Kimball House. If anyone's in Atlanta, and you don't know it, you should absolutely go there. 

We work with this guy, Miles Macquarrie. He's a [multiple] time James Beard finalist and he did all the recipe development. He's quite good at what he does. So that's sort of where we started. 

Took his recipes, and had a formulation company scale those up so they can be  created on a production scale. That took quite some time as well. And they were all sort of happening in parallel paths. 

And I'd say the hardest part was probably finding a Co-packer, someone who was willing to say, "Alright, this seems like a good idea. I'll try to fill this can that you've got here." That was probably the most challenging part.

Chase Clymer  

And for people that aren't in the beverage space, what is a co-packer a little more in depth?

Yoni Reisman  

Yeah, sure. It's, you know, instead of buying your own equipment, and renting facility and insurance and all that goes with that, essentially, you outsource that. 

So there's companies out there that all they do is fill cans for other brands or bottles. And so that's what a co-packer is, for us.

Chase Clymer  

Awesome. And then so with all that stuff going on, how long did it take to go from conception to you've got a product in your hand and you're ready to start going to market?

Yoni Reisman  

I'd say it was probably about 2 years. So we were on shelves in October of 2019. And I think it took about 2 years to get to that part.

Chase Clymer  

Alright. So putting the product on shelves. So with your go-to-market strategy, obviously there's a big retail portion of it. 

On this show, we're definitely leaning more heavily on Ecommerce. In launching a spirit brand... It's not a spirit brand. Sorry that I'm saying the wrong thing, but ready-to-drink... 

Yoni Reisman  

Spirit-based. 

Chase Clymer  

Yeah. A ready-to-drink product online has its difficulties. So how did you approach going-to-market with the direct-to-consumer route?

Yoni Reisman  

Yeah. That was always of interest. Like I said, music was my background. I knew nothing about the Three-Tier System in Beverage/Alcohol, which I've learned quite a bit in the past few years so I always wanted to be able to sell these online. 

As Jay was saying, both Neal and I come from that music festival world where our goal was to market to people, get them to a website, get them to buy a ticket. 

So that was the goal and that's what we wanted to get to. It was quite challenging, and there was significant learning there. But, ultimately... 

So we were on shelves in real life through traditional distribution in October 2019. And I think it took about a year to figure out how to do direct-to-consumer, which isn't actually direct-to-consumer, by the way, because that's not legal. 

We just sort of call it that. 

We still have to sell to a distributor who sells to a retailer that is able to sell online. And the laws are not only different in each state, but they're all very gray. There's no very clear rule. So it's a complicated world.

Jay Liddell  

In most industries, you go direct-to-consumer first, and then you get to retail with your products. But due to the complexity and gray area... 

That's why interestingly enough, that did take us an extra year from being traditional retail, to then doing the original entry point, which was supposedly going to be direct-to-consumer. 

So just an interesting tidbit about this particular industry.

Chase Clymer  

Absolutely. So to draw parallels to maybe a similar industry like apparel or something like that. It's almost as if you are selling your wholesaler's products for them, in a sense on your main website to deal with how the limitations of the laws work. 

That's probably a very, very oversimplification of the process, though.

Jay Liddell  

I mean, it's a market... It's just as you're saying, we're marketing to consumers to draw people to the website to then have the actual monetary transaction occur outside of ourselves to a retailer. 

But of course, we are selling to a distributor [of] goods, that then that retailer is then selling to the end consumer. 

So we look at it as more of drawing people to our site, so that they'll be redirected as more of a marketing top funnel activity.

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Chase Clymer  

And I played around with the site a little bit before this [podcast] today. And when people land, you ask kind of what state they're in, and then that kind of dictates the path that they can take probably

Yoni Reisman  

Exactly right. Some states are just a hard no. We're sorry, your state doesn't allow this. And then yeah, that's exactly right. Other states will figure out which retailers can serve you, and so on.

Chase Clymer  

Then did you guys have to build something custom for that? Or are there solutions in the market these days that help you solve those problems?

Yoni Reisman  

Yeah, there's a number of solutions out there in the market. Yeah, there's a number of them. We're actually not legally allowed to do that ourselves. 

So in the alcohol industry, it's called a Third Party Marketing Agency, which is a little confusing, quite honestly. 

That's not how we describe it. But it's essentially a fourth tier, if you will, of a three tier system.

Chase Clymer  

It's very interesting to hear just the complexities that go along with the challenges that you have to face with your particular industry. And unfortunately, how easy it is to sell a t-shirt online. 

Yoni Reisman  

Yeah.

Jay Liddell  

(laughs)The good news is that anybody who's interested in the space, can do their own search, and within an hour unpack a number of ways to get there.

But really understanding the unit of economics and what the cost of acquisition is, lifetime customer value, those things that are readily available and more or less known to most basic apparel companies becomes a little muddier in our world. .

Chase Clymer  

Oh absolutely. Yeah, you guys actually have a really interesting partnership. Did you announce that already or are you about to release that information?

Jay Liddell  

It's been released. We've been enjoying it for almost a year now. So yeah.

Chase Clymer  

Absolutely. So let the listeners know what I was alluding to.

Jay Liddell  

Well, because Yoni and Neal are Atlanta-based and Miles Macquarrie is based in Atlanta had a lot to do with the fact that the major focus of the pandemic was operational ease and sort of finding new ways to delight customers, amongst all the other things that we're all dealing with.

And Delta Airlines decided that they wanted to offer a classic cocktail experience to their fliers. 

And so while some other airlines were denying economy class beverage/alcohol on flights for obvious reasons and just operational complexity.

Delta in April of 2021, brought the Tip Top Margarita and the Tip Top Old Fashion on the planes and the entire domestic market in short-term international flights. 

And so we are their cocktail partner, which has been an incredible partnership not just from a selling perspective, but from a marketing strategy perspective. 

They've really leaned on the local relationship of bringing Tip Top's name to the forefront of their communications to their passengers. 

There's ongoing innovation discussions about new items, new products and new ways to continue to help them at Delta Airlines delight their customers and serve them better quality products, like Tip Top so it's been tremendous. 

It's been a way for us to expand our distribution, our reach our trial, and certainly provides a platform that being an Atlanta-based company we would not have had in this short span of our lifetime that allows us also another vehicle to draw people back to our online efforts.

Chase Clymer  

Absolutely, I was gonna ask. Obviously, it's probably a decent sized order. Everyone's happy with that. 

And it helps you guys hit metrics that you want to do. Like you're saying, unit economics increase the sales volume so you can get better economies of scale on stuff. 

But did you see an uptick in just... I guess, the traffic to the website from areas that you weren't really marketing to, from putting your cocktail on these  domestic flights?

Jay Liddell  

I think Yoni, if you can speak to that one a bit, the additional hubs. Atlanta has been obviously exponentially growing in searches and awareness and how our sales have been operating. 

But we're getting a pretty clean uptick across the board month over month in the population, in the sort of Ecommerce-centric places like Southern California, and New York, and usual suspects. 

But I don't know if there's any other definitive insights that we can gather yet from that Delta awareness as it relates to online. But Yoni, if you have an idea, then please. 

Yoni Reisman  

Yeah, I think that's exactly right. There wasn't anything in particular. 

Generally, awareness increased, of course, as more people were flying, and becoming aware of the brand. But yeah,  there was nothing in particular from a geography standpoint that stood out to us.

Chase Clymer  

On the back of that question. So were there any things that you guys... Were there any activities that you guys have done that have helped increase online sales for the brand?

Yoni Reisman  

Yeah. One thing we did, it's sort of based on a hunch, and we wanted to test it out, is that we felt free shipping was something that consumers have started to expect. 

And because of all the folks in the value chain, as I mentioned, distributors, retailers, and us, we couldn't just offer free shipping, because it turns out shipping is not, in fact, free. It costs money. 

So what we did is we increased the price of the eight-packs that we sell online. And that worked out really well. So yeah, we increase the price from $35 to $40 and sort of... $5 isn't... That's not going to cover shipping. 

But what we did is we said, buy 3 eight-packs, and you get free shipping, right? And that increased our average order value tremendously. And that worked really quite well. 

There's something in the psyche of consumers that they don't like paying for shipping and I'm one of those people. I don't like paying for shipping either so I get it. And it worked.

Chase Clymer  

Yeah, that's a great strategy to test when you're working on your pricing and working on your offer when you're first bringing your product to market. 

And I see people doing that all the time with the 2 tactics there that you spoke of: The one is, "Do we charge for shipping or not and just increase the price?" 9 times out of 10, people don't care about the price increase, they care more about having to pay more, period. 

If there's another surcharge or fee, as opposed to just it being a certain price and free shipping... 

But also offering the free shipping tier as an upsell as far as "Let's get this average order value up by making a bundle." 

Those are 2 fantastic strategies that you don't even have to be in your particular industry to utilize. You could use that all over the place with any type of product that you're selling online. 

So those are two things that [you should] definitely take a look at and strategize. Honestly, it would work for your own particular business. 

Now is there anything I forgot to ask you about today that you think would resonate with our listeners?

Yoni Reisman  

No, I'm not sure anything jumps to mind immediately.

Jay Liddell  

Yeah. I just I just think the usual stuff around making sure your consumer experiences as  you would want it to be. In other words, if you're trying to experience something online, you want it to be smooth, easy and simple and deliver. 

So we were always trying to improve that and we're not there yet. But we've gotten through I think some of the basic steps and we've got some good feedback from our consumers. 

We had some challenges last year when we first got started in ensuring the retailers were in stock with some of our products. And there was some frustration on the customer service side. We had the field regular... 

"I ordered this, it didn't arrive for nine days." 

"I ordered this, it didn't arrive for 12 days." 

"Where's my order?" 

Those kinds of issues. And luckily we've been on top of that a lot more over the last few months and we have... 

Very rarely do we have a customer service issue now with our current order flow. But that's... 

That was a challenge that we had to overcome: Managing the inventory stock, making sure that we have good communication from our website to our consumer/customers on.

If there were to be a time, a delay or an inventory was out of stock, how do we communicate that? How do we share transparently? 

Neal Cohen, he wrote a pretty heartfelt letter about the process of getting you your cocktails when you want them. 

So that really resonated with our email audiences and beyond. Because it's really important for all of us that we just keep everybody in the loop on what our mission is, which is to bring you some of the best cocktails you can have. 

Where you don't have your favorite bartender, you can have a can of Tip Top.

Chase Clymer  

Absolutely. And just setting expectations from the get go are just... It's going to be such a better customer experience along the line. 

So we chatted here for almost 30 minutes about these beverages. If someone wants to figure out if you guys actually ship to their state, where do they go to check this thing out?

Yoni Reisman  

Hey! You can go to tiptopcocktails.com and you can find us there. 

Chase Clymer  

Absolutely. Thank you guys so much for coming on today's show.

Yoni Reisman  

Thank you very much. Appreciate it. 

Jay Liddell  

Thanks so much.

Alright. I can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. 

We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes. 

Make sure you head over to honestecommerce.co to check out all the other amazing content that we have. Make sure you subscribe, leave a review. 
And obviously if you're thinking about growing your business, check out our agency at electriceye.io. Until next time.