Last year online wine sales topped out at $5 billion worldwide, according to estimates from the Bordeaux Management School. In fact, of the 3,000 people surveyed, 57 percent had visited an online wine site, while 35 percent had made an online wine purchase.
The same study showed that online wine buyers are more involved in wine than those who buy offline--a statistic that is sending many winemakers and retailers scrambling to create online wine purchasing portals.
NakedWines.com directly connects customers with their favorite winemakers and is taking the e-commerce side of the business one step further. The customer-funded e-commerce site, not only sells wine from small producers; it directly connects its customers (a.k.a, Angels) to the winemakers to provide feedback--a nearly impossible feat in an industry riddled with layered distribution models.
I spoke with Benoit Vialle COO of NakedWines.com, about his company's customer-focused business model, the growth potential, and the benefits of connecting with customers in an effort to rise above the competition. Here's what he had to say:
What are the challenges in the wine industry currently as it pertains to sales and building customer loyalty?
The challenges worldwide are that a lot of wine producers are completely disconnected from their customers. Because their distribution system is layered...it's hard to directly connect to consumers. This is detrimental to consumers because they don't understand who makes the wine and it's detrimental to producers because they don't know what customers expect and they can't affect the way they make the wine to pertain to the needs of the audience. There's definitely a lack of connection between consumers and winemakers.
Did you decide to create the company to help solve these challenges?
We started five years ago in the U.K. and the idea was to help solve the problems that winemakers are encountering--getting financing, securing loans, getting the money to buy the grapes. The other challenge is breaking through the noise. They spend weeks and months on the road trying to sell their wine. So we wanted to break this vicious circle. Now we handle sales and marketing for them. One thing we ask them to do is to respond to consumers via our website. We connect winemakers and consumers and eliminate a number of the big barriers the wine makers will face when they start productions. That was the initial premise five years ago in the U.K. and it will continue to grow in that direction. We just celebrated our two-year anniversary in the U.S. and in Australia and the growth is tremendous.
What do you attribute to that growth?
A couple of things. There's no shortage of supply or interest of winemaker on our end. We see our proposition resonate on supply side. We need to recruit customers to make it work. On the consumer side, it's a new way to address the people who like wine. It's not exclusionary--it's very inclusive. It's a new way to approach this world of wine that's been distant. We came up with an approachable approach. It allows them to connect directly with the winemakers and their peers. People who felt excluded from the wine business now feel welcome.
I see you have thousands of reviews on your site. Why are reviews important to the growth of your business?
We already saw it as something that is a "nice to have." It turned out that it wasn't just a "nice to have;" it was a condition of selling. In the early days...most people were not actually participating. Now we have thousands of reviews and ratings and that's when the business took off. This level of engagement connects people with the website and is what's driving the growth of the business. Our metrics are making sure customers are loyal and are repeat buyers. We found the biggest driver for this is how many people engage with us on the site. If we can teach those early behaviors to our customers, we know these customers have a much higher chance of becoming high-value, loyal customers.
How do you teach those early behaviors?
We have an onboarding process. We are the in the process of refining it in the U.S. When you receive your box, we also send email communications, asking people to rate the wine. We really try to drive as much as we can the notion the value for the consumer to engage in those behaviors because it's not NakedWines speaking to customers, but the winemakers themselves. We include a communication from a winemaker in the packaging asking for help rating his or her wine. I think that this comes from a winemaker makes it more powerful
How do you leverage social channels in these efforts to compound your company's reviews?
We have a Facebook and Twitter page, but there is definitely a lot more we can do. We share stories about the company and winemakers, but we have a long way to go to use those mediums as effectively as we can. We haven't done much yet on Instagram and Pinterest.
I noticed that your customer service team is called the "Customer Happiness" team. Can you talk about that and how are they empowered to resolve customer issues?
The fundamental of our business is repeat business. The business makes sense for us when turn customers into angels. That's when we have funds for a wine project and we can turn them into lifetime value customers. For us, the most important thing is people understand clearly our value proposition. We have the customer happiness team who is heavily empowered to make the right decisions for our customers and we find that people respond well to this approach. Even our outbound team who calls on our angels...this is not a sales team but more of a support team. It's very important for us not to have a hard core sales approach. If we're trying to drive the short term sale, we'll very quickly be out of business. What we're trying to drive is knowledge.
Is the customer-funded model idea for every industry?
The premise of connecting customers with an artisanal producer--whether it's a wine maker, cheese maker, or someone who makes music...is a powerful concept that goes beyond wine. There are a couple of ingredients that make this work: having a product that is an artisanal creation...and knowing the person behind the creation enhances the understanding of the product you make. The other component is having this notion of including customers in the creation process. That can apply to many different industries. Our customers like to take part in making these projects happen. That's the other high-level value proposition for our consumers that is appealing to them.
What's next? How do you plan to grow the business?
We'll continue to build toward authenticity and not lose track of it. As we grow, we'll satisfy the growing base of customers. It's very important not to lose sight of it. There's a lot of room to grow in the wine space, and we're only scratching the surface in the U.S. There's a huge base of customers waiting to learn more about wine. We can grow this business three to five fold in the U.S.
What advice do you have for other mid-size businesses who are struggling with moving past the competition?
For me it's about allowing customers to provide feedback. Take feedback into account where you can listen to customers and change the course of a product's development. We find in some cases that the winemakers take risks and the feedback and responses we get from our Angels is that they don't like it. They give this feedback directly to winemakers. For example, a Pinot Grigio last year was not in the direction people wanted and expected. It was too sweet...the winemaker got a lot of feedback on this and this year he corrected the course and he produced something that was a lot dryer. We're nurturing this connection between production and consumers. That's the biggest thing we're doing.