Every month it appears there is a new online wine concept that claims to be about to revolutionise the industry. Well let us introduce you to Winebuyers.com that does, on paper at least, have a unique business model. It is offering the chance for consumers to buy wine at exactly the same price as they would from a supplier, taking no cut or adding mark ups along the way. Sounds too good to be true? Richard Siddle talks to its founder Ben Revell.
Winebuyers.com is nearly halfway towards the £525,000 investment it is looking to raise on Crowdcube by April 12. But what are investors, that can pay as little as £10, getting for their money? An online wine service that promises to cut out third party fees by charging producers, distributors and merchants a regular subscription fee to use the platform.
We hear a lot about consumers, particularly the much sought after millennials, who are all looking to invest in products and services they see being as authentic, trustworthy and transparent. Winebuyers.com claims to be all those things with a business model that offers consumers the chance to buy wine at the same price as suppliers can from producers. Which is likely to send a shudder down the spines of importers and distributors everywhere. That is until they realise they can also potentially benefit from this new e-commerce platform by putting their wines under the noses of engaged, relevant consumers and then charging to deliver their wines to them.
Here’e how founder and managing director, Ben Revell, believes Wineubyers.com can make a difference to e-commerce wine retailing.
Tell us about Winebuyers, how does it work?
Working on a completely transparent model, Winebuyers do not mark up prices or charge commission on any item sold, enabling customers to buy wines at exactly the same price as they would from the supplier. Winebuyers makes revenue from charging suppliers a small monthly subscription fee to be listed on the site. Custom built API’s automate the entire process minimising costs on all sides. All Winebuyers needs from the supplier is a URL and a nod to get going.
Can you go through the individual costs involved for producers and wine merchants and distributors?
It is all done on a sliding scale based on how many listings you have. But for producers the maximum monthly fee would be £100. For merchants and distributors then it is based on £100 a month for 50 listings and then going up on a scale to a maximum £450 a month for 5,000 listings or more.
The advantage for merchants being involved in the site is that it gives them another route to market, more visibility of their wines and crucially the fact that the algorithms behind our API have been designed to bring interested, relevant consumers to the site.
Where did the inspiration for Winebuyers come from?
When I was 18 I found myself at a wine auction, and knowing a little bit about wine due to our family interest, I bid for a selection of wine where the price seemed too good to be true. From there I started to collect wine, and then started selling it in order to build up my own fine wine portfolio. Which, in 2013, turned into Prestigious Wine Ltd which I set up to satisfy my own interest in investing in fine wines and Champagnes.
You could say the project was born out of necessity, there wasn’t any viable way to sell these types of products online. At the time you were not able to sell on Amazon and to this day you can’t on eBay UK, auctions charge 20% commission and websites like bidforwine take an age to complete a single listing. It was as a result of this particular venture that I identified a gap in the market which led me to establish Winebuyers.
Why do you think it is such a unique model?
The Winebuyers concept is completely new to the industry, giving smaller sellers the opportunity to reach consumer audiences they otherwise could not, encouraging growth by maximising their margins. Winebuyers.com currently lists 27,000 bottles from 38 countries worth £10.5m.
How does a consumer get involved with Winebuyers? Is there a subscription/minimum order?
There is no cost or subscription price for a consumer to become a member of Winebuyers.
Who do you see as being as the ideal target customer for Winebuyers?
We believe the audience for Winebuyers is far reaching. Primarily, we are targeting the UK market due to logistics and knowledge of the consumer base. Key target customers naturally include professional millennials due to their multi-modal networks where technology is commonplace. On the other hand, much of the UK’s spending power lies with monied and cultured Generation Xers and Baby Boomers, who tend to be more knowledgeable on wine products and are currently still the largest consumers of wine in the UK.
Wine is no longer just for the connoisseur. The UK has over 30 million regular wine consumers across all regions, ages and social classes, with 77% of UK adults buying goods or services online in the last 12 months.
How are you going to recruit and build a community for them?
Logging in to Winebuyers gives the consumer access to all that is on offer on the platform from both a wine range and content point of view. For as well as having an extensive number of wines available to buy we will also be offering relevant content by building up a portfolio of bloggers and industry influencers who are going to be contributing to this part of the site. We are also approaching sommeliers and other authorities to give advice.
We believe there is a big audience out there looking or this kind of content. Wine, for example, is among the top eight categories discussed online. It’s a social product, most people will share a bottle. We know that 80% of millennials use a smartphone for at least two hours a day and 55% collect shopping information from online social interactions.
The difference between Winebuyers and other retail blogs is that we do not make money from the sale of the wine. This means consumers can be confident that we are providing them with un-biased and newsworthy information. For example, we will not publish an advertorial about one bottle of wine to push a sales, as we do not stand to benefit from this. This provides a level of trust which modern day consumers value highly.
What sort of wine experience does your team have?
I personally have 10 year experience buying and selling fine wine and have run three successful companies to date; Santi Barbat, head of web development comes from the vineyard filled regions of Mendoza; and Ciara Hinton, head of marketing, has a keen personal interest in wine and is WSET Level 2 qualified, looking to study Level 3 at some point this year.
You are in the middle of a crowdfunding investment drive – how can people donate and get involved in that?
Donations is the wrong word – Crowdcube is an equity investment platform. This means that any person who invests in Winebuyers will become a shareholder in the company. Investments can be as little £10. For investments of £5,000 and upwards, investors will be given A class share status and voting rights within the company. There is also a Rewards Scheme for higher level investors (see link with more information here). We also have a five year exit plan.
How is the wine delivered to customers from producers?
The progression within companies such as FedEx and DHL over the last three years makes shipping from the producer to the consumer not only viable but the quickest and most cost effective. Before it simply wasn’t practical. We have been working on the logistics with regards to shipping costs for the best part of seven months.
Our new shipping/delivery calculator will be going live in the next two weeks. Shipping costs are unique to each supplier, they have full flexibility to set variable parameters. For example, should they offer free shipping on orders over £100 this will be reflected on the site or if they only ship to mainland UK they will be hidden from view for anyone browsing from a non UK IP address. It will also flag if you select a different address for delivery at checkout should the seller not ship there, which is necessary for people who are using VPN’s to access the site.
In essence the shipping costs on Winebuyers will be exactly what the supplier charges.
So you are working with traditional wine merchants as well as wine producers? What is the advantage for them working with you who could sell their wine directly to their own customers?
Winebuyers provides another route to market for merchants, increased exposure and increased brand awareness – all without taking a commission. Also crucially all the technology is automated, meaning zero manual work is required on their part.
What sort of price points of wine do you have on the site?
Prices range from a bottle from as little as £5 to almost £50,000. This offers consumers a choice right through from everyday drinking wines to fine investment wines.
How are you looking to sign up wine producers and raise awareness of what you are doing?
Well currently we’re not. Our challenge at the moment is coping with the initial demand we have received from the trade. However, we will be featuring in future events such as the London Wine Fair and the Crowdcube pitch has created quite a big ripple, both to the trade and consumer.