Iris Nova, the order-by-text upstart behind trendy wellness drink Dirty Lemon, is building an empire of nonalcoholic beverage brands that has soft drink titans on alert.
Six months after securing $15 million in funding from investors that included Coca-Cola and celebrities like actress Kate Hudson and baseball’s Alex Rodriguez, Iris Nova announced in June 2019 that it will invest up to $100 million over the next three to five years to expand its portfolio of beverages developed internally and potables created by other companies.
Today its signature Dirty Lemon brand includes 13 flavors, such as a charcoal water and the newest unveiled in June, aloe. In addition to letting customers order their drinks by the six-pack via text, the brand is also experimenting with its own locations.
“We will be investing minority stakes in beverage companies and [using] the technology we developed as a value add for those investments,” Iris Nova founder and CEO Zak Normandin said from the stage at IRCE@RetailX in June. As a direct-to-consumer business, Iris Nova leverages data it collects about consumer preferences — intelligence not accessible had it distributed via traditional retail channels — to inform new product concepts, pricing and other decisions, he said.
The technology Iris Nova developed is a Short Message Service (SMS)-based sales and communications platform that enables consumers to ask questions and place orders for free delivery via text messaging. These text “conversations” — what Iris Nova calls “cCommerce” — are handled by digital robots powered by artificial intelligence, specifically natural language processing (NLP).
Dirty Lemon is in step with a broader trend of retailers paring down shopping to the basics, leveraging the ease and familiarity of texting to deliver simple, personalized buying transactions to consumers on the go, according to the Future 100 Trend Report from the Innovation Group for J. Walter Thompson.
And Dirty Lemon “is one of the pioneers of this model, relying ... on text messaging to sell its Instagram-famous drinks,” the report said.
Text message, by far the most ubiquitous form of communication in the world, is just the way we communicate now as a culture.
Zak Normandin, founder and CEO, Iris Nova
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Iris Nova took today's most popular form of communication — texting — and turned it into a point-of-sale method. Looking for guidance on how your business can accept and track payments? Read more here.
Bestie or businesslike banter
A full 90% of Dirty Lemon customer orders are processed via text exchanges that can mimic banter with a bestie — or be all business — depending on customer preference.
In the event programming logic fails to interpret a customer text, a live human steps in to pick up where the robot left off and completes the transaction. The switch — robot handoff to human — goes undetected because human customer service representatives maintain the conversational cadence established in the text thread.
“We don’t ever think bots are going to take over,” Normandin said. “We think our bots are a great way to make the process of servicing a customer more efficient but it’s not something that is going to take over customer service.”
Normandin said texting can restore the brand-customer gulf that’s widened since soft drinks’ earliest days, when shoppers confided ailments to pharmacists who recommended elixirs like Coca-Cola to ease symptoms.
“As the beverage industry has grown, a lot of that personal connection has been eliminated,” he said. “Text message, by far the most ubiquitous form of communication in the world, is just the way we communicate now as a culture.”
Texting is faster and simpler than other ordering methods, he added, because it does not require logins or app downloads.
Data collected through the direct-to-consumer model provides visibility into evolving consumer preferences and that’s key to new product development, Normandin said. He cited Diet Coke’s data blind spot to illustrate Iris Nova’s opportunity to become a major player in the global beverage market projected to reach $1.9 trillion by 2021, according to Lucintel.
“Coca-Cola invested in our vision to build the next CPG conglomerate,” Normandin said. “If Coke had data on all consumers who’d purchased Diet Coke since they first launched it, they would have been able to create a new product and target it directly it to those customers. They were not able to do that,” he said, “because the purchasing behavior of customers buying Diet Coke — their best customers — was all held by retailers.
“Our vision is to pool customer data and operational infrastructure at the parent company level and then allow all the brands in the portfolio to have access to those resources,” he added.
Another means of intelligence-gathering is Iris Nova’s brick-and-mortar retail format, The Drug Store, with two locations in New York and openings planned for Chicago, Miami and Los Angeles in the next 12 months, Normandin said. Described as a “walk-in vending machine,” The Drug Store is cashierless and based on the honor system; consumers grab a bottle from the shelf and then send a text to pay for their purchase. Theft is below 5%, he said.
It is here at The Drug Store, a marketing/testing vehicle more than revenue driver, that Iris Nova introduces new flavors. Immediate and direct feedback via text and social media enables the company to bring news product to market in just 30 days’ time, Normandin said.
Speedy delivery is key. “Our goal this year is to beat Amazon Prime on shipping speed,” he said. “We want same-day delivery in most major markets. In all the other markets, we want next-day delivery.”
The direct-to-consumer model, data and technology give Iris Nova advantages the beverage giants lack, Normandin said. “I think we can do what they are doing, better.”
- Barbara Thau contributed to this story.
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