Disruptive online wine service Winebuyers was conceived and launched just over two years ago in response to the wine trade’s slow uptake of e-commerce. To say that they were in the right place at the right time during lockdown is an understatement: Sales have increased over 800%, new memberships are up 700% above forecast, average order values are up 38% and the company has onboarded 80 new suppliers who didn’t have a route to market. CEO Ben Revell looks here at what else the changes over the past five months have taught him about the nation’s changing drinking habits and what lessons there are to learn for the rest of the trade.
“The manner in which the logistics in the UK have managed to adapt has been hugely impressive,” writes Revell, “I’d expect this shall increasingly become a faultline for the industry as the expectation for fast, complimentary delivery threatens margins and requires greater investment infrastructure.”
The measures put in place to limit the spread of Covid-19 have had repercussions to all aspects of British society. The impact lockdown has had on the drinks trade has affected supply rather than demand, almost uniquely in recent history. All data publicly available shows that consumer appetite has held strong, though the value of that spend has diminished and changed channels. Most keenly this has been felt in the on-trade with many HoReCa businesses under an existential threat.
The nation found supermarkets increasingly inconvenient in the immediate aftermath of the UK Government restrictions, imposed on 23rd March 2020. For those able to satisfy this demand there was a commercial opportunity. Customers came online with a 400% boost in online drink sales widely reported.
At Winebuyers, we witnessed our best back-to-back trading days in volume and revenue with an increase in sales by 817% over the last three and a half months to 3rd July. Delivery became preferred and with people reliably in the house, one of the greatest obstacles to fulfilment was removed.
What provoked the establishment of Winebuyers was the drinks trade’s slow uptake of e-commerce. The online marketplace is fantastically effective at capturing demand but less so at creating it. The distribution of sales in wine is much flatter than most industries and this has been an obstacle to the performance of drinks sales. As more and more of our life moved online, I conceived Winebuyers as a digital platform for the trade to stand on. In bringing together hundreds of portfolios we can capitalise on the diversity of interest. The cost of building effective e-commerce rises year on year but that cost grows logarithmically in relation to turnover. So, we built a secure market at which suppliers to us can set their own price and terms without compromising performance. Those with products to sell, hire us to sell it and retain the entire value of the sale.
Being in the right place at the right time
With the restriction imposed by social distancing, and as much of life’s other pleasures were denied to us, food and drink heightened in importance. With this increased engagement and interest the sector responded. Across all our channels engagement increased; with email communications in particular showing a 75% jump in conversion rate between February and June. April saw double the number of sales realised in December which previously had been, by some way, our most successful calendar month since our launch in May of 2018.
If we look to our aggregate data on customer behaviour, we see noticeable change in the last month. Customers are spending longer browsing the platform with average dwell time up by several minutes. Increased traffic has coincided with an increased conversion rate as consumers have had more time to engage with the platform and staff. In the absence of human interaction customers have taken to our live chat function. New membership figures are up 700% on daily forecasts with an appetite to spend. The average order value has increased by 38% from £100 to £140, that alongside demographic shifts mark a new and wealthy audience moving online.
The social distancing measures largely served to exacerbate existing trends. The most immediate response to the challenge of supply was to shorten the supply chain. The Direct to Consumer model isn’t a new idea to wine by any means but technologically has broadened its reach and increased its potency. We’ll continue to expand the Winebuyers logistical support to enable us to work with more vineyards and distilleries as directly as possible.
An increasing need for the drinks industry to innovate
The great asset that Winebuyers has is its adaptability. The website is repopulated anew everyday allowing us to react to fluctuations in the market. This isn’t an option available to brick and mortar establishments, but it will become essential as we deal with the fallout of Covid-19. The beauty of our model is we can adapt swiftly and efficiently, acting as a conduit between seller and buyer gives us the flexibility to adjust to ever changing market conditions.
During lockdown the Winebuyers offering has changed significantly. With many wholesalers and producers without a route to market, the speed of our platform and its efficacy became essential to their business. In the last two months we have onboarded 80 new suppliers without disruption to customers. The manner in which the logistics in the UK have managed to adapt has been hugely impressive. I’d expect this shall increasingly become a faultline for the industry as the expectation for fast, complimentary delivery threatens margins and requires greater investment infrastructure as customers increasingly come to expect it.
For Winebuyers, we will continue to focus our effort on customer retention and geographic expansion. We have had the opportunity to expand our dataset significantly and we know the extra utility we need to build to be more targeted in our marketing. What the industry must continue is to be as flexible as possible. Durable planning in the UK has been particularly fraught over the last few years with the lockdown being the latest and greatest of these challenges.
The recession to come is again unknowable but what we strive to be is adaptable. If readers of this look at how much their working practise has changed over the last three months, it is this responsiveness that is essential to any business’s health in the future. The drinks trade has, throughout its history, been a powerful source of innovation which has arguably stifled in recent years, particularly in its perception. A business that stands still at the moment will be left behind. We’d do well to remember every tradition was once an innovation.
Winebuyers is an exclusive online wine club with a simple mission: to bring wine into the 21st century. Using custom built API technology, developed over 18 months, Winebuyers connects wine lovers directly with some of the best vineyards, specialist merchants and distilleries in the world. Winebuyers instantly integrates with producer websites for automated real-time stock updates and provides access to some of the world’s finest and hard-to-find wines and spirits, with over 80,000 bottles available, spanning 40 countries, all with zero mark-up and all with a commission free price-tag.