Embracing multi-channel is ‘transformative’ for wine businesses
The effect of multi-channel can be “transformative” for the industry – but a lot of fine wine businesses are failing to maximise the opportunity by “still managing the process on a spreadsheet”, the DB Conference heard last week.
Speaking at the second panel session, on multi-channel operations, James Miles, chairman and CEO of Liv-ex argued that while people have historically “avoided” investing in multi-channel, particularly in the fine wine space, “because it just seemed too complicated and too expensive”, it has become “significantly easier and cheaper” for merchants to introduce an automated multi-channel system that replaces laborious manual processes – with real time uplifts in margin.
Businesses were previously forced to address issues such as how to manage stocks across different types of customers, at different prices and across different channels, while a lack of real time information meant that sales teams were in different offices potentially clashing with ecommerce on a website. This made multi-channel “very challenging”, he said.
However, the advent of multi-channel systems that are “incredibly well priced for the kind of small wine merchant who are often using Liv-ex”, he said had given … high-exposure to potential customers.
Finding solutions
Miles was joined on the panel by Bart van den Meiracker, CEO of Actenzo, whose “fantastic solution” to the multi-channel conundrum provides a ‘plug & play’ system that connects to major wine & sprits marketplaces including Vivino, Wine-Searcher, Liv-Ex, eBay and Google Merchant Center.
Van den Meiracker said that when he moved into wine ecommerce, he saw a “very fragmented wine market” full of small ecommerce players who were “very passionate about wine but…. not very passionate about IT.” Meanwhile, the marketplaces themselves were more focused on the consumer side, rather than the back end of the system that had the potential to facilitate smoother transactions and make it easier for wine merchants to focus on their wine business and not IT.
Building an interface between the merchant and the marketplace to synchronise wine catalogues and stock levels has proved key to smoother integration. Once they had built their own platform with Vivino, the next step was to help other wine and spirits merchants to connect with the platform and scale multi-channel marketplace integration – something that rolled out in 2021.
It solves the kind of situations Van den Meiracker said his wine business had during the Covid ecommerce boom, when more than 800 Vivino orders came in on Black Friday, but then had to be manually input into their own back-end system to ensure correct stock levels in the warehouse.
Steps to success
However, van den Meiracker notes that the successful merchants are those that have the relationship with Vivino, who do promotions that “specifically reach out to the big-base of users on the platform”.
However he points out that not all marketplaces will necessarily be a good fit for their business, or successful. They need to ask themselves what the reason is that consumers would like to use that marketplace and be prepared to find the best fit.
“You just need to try as many marketplaces as you can as a merchant – and usually marketplaces are commission based, so it’s also relatively cheap to try it out,” he says.
Increasing affordable and reach
Miles argued that cheaper infrastructure that is easier to use has been a big part in changing the status quo. API’s (Application Programming Interface – the framework that allows different software applications to communicate with each other) have become “much easier to use, much more common and much better understood”, while the software that manages business processes (enterprise resource planning or ERPs) have moved to the cloud, making integration easier.
He also cites the introduction of Liv-ex’s L-WIN codes (a unique seven-digit numerical code to quickly and accurately identify a unique wine by producer, brand, grape or vineyard, with vintage, pack and bottle size appended via a standard format) as having another big impact.
It makes it “much, much easier for different computer systems to communicate with each other,” he pointed out. “it’s a hell of a lot easier if you’re speaking a common language!”
Greater automation
Taken together, these allows you to automate “a huge amount of business process”, Miles argues, making “really transformative” multi-channel a reality with tangible results.
“When we see customers list their stocks on Liv-ex in an automated way, you’re not seeing a 10% or a 20% uplift in trade, you’re seeing 100%, 200%, 300%,” he said. “And these aren’t small customers; these are quite big customers.”
Are fine wine merchants missing a trick?
However, a lot of the fine wine players from the small merchants are missing an opportunity by “still managing that process on a spreadsheet”, he said. But having stock “available, everywhere in real time, 24/7” is “very powerful”, as it maximises opportunities and exposure while ensuring that stock isn’t “double-selling” through a different channel.
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“Being connected to Liv-ex gives you 600 merchants in 50 countries, and we’re handling all the logistics and doing all the difficult plumbing work to make all that process work,” he said.
‘Interesting developments’
Although Actenzo now connects about 200 merchants worldwide with Vivino, it is looking to build on its existing relationships with other platforms. As van den Meiracker says, “if you have a connection with the merchant, why not offer those wines also on other platforms that are interesting?”
The team are currently launching a Liv-ex merchant via Actenzo’s connection to help smaller merchants that sell fine wines on Liv-ex – “an Amazon marketplace for wine”, Miles notes – as well as one with Wine Searcher.
But to an extend the sky is the limit – van den Meiracker notes “interesting developments in the US” where they are working with ex-Vivino staff are on a new AI wine sommelier platform, where Actenzo will provide a back-end integration with the merchants that offer the wines.
Sourcing key to maintaining margin
According to panellist Jean-Christophe Coisy, CEO of Cave de Famille, “the real issue today is about margin, and the way you create margin is how to make your wines more exposure and more transparency on the market.
“Everyone can go on Wine Searcher and google wine, so you struggle with the margin, so you need to go faster, and be reliable on your sourcing,” he says. “[this] makes you better than your competitors”.
Coisy noted that after syncing the Cave de Famille webshop to Liv-ex, his business turnover multiplied “by three time, this year compared to two years ago”, with growth coming from private client, who are primarily looking for wines to consume at dinners and events.
Stock-holder to consumer
And this belies another important trend – business has switched from “supply to demand”. “We have more and more clients who want to drink wine, who want to find it, and find it at a good price, know where it has come from,” he says. The next generation of fine wine buyers has moved from being “stock-holders to consumers”, as wine switches from being “an asset to emotion”.
“And the clients want to live the experience faster.”
It is therefore important to connect on a platform where you can find good sourcing, as well as transparency over the overall market. “What is the bid and offer? What is the wine the people are looking for? What the trends so you can connect as well on the sourcing and the demand?” these are the things that sellers need to know, Croisy explains.
Miles agreed. “You’ve got to find new ways of adding value” – and a transparent marketplace is “a fantastic model to drive value to customers. “You give them huge choice. You keep them in your environment. And it’s a great business model.”
Logistics
The panel also discussed the issue of logistics – which is both the biggest cost for fine wine sellers as well as “a massive part of the service”, Miles noted – which has been made more complex by both Brexit and US tariffs in terms of customs and increased paperwork.
Logistics, Jean-Christophe Coisy said, were “one of the key issue today for fine wine” not only as it takes part of the margin but also as it maintains client confidence. “It may be a success or failure, because if… the private clients wants to have the wine delivered for special events and for whatever the reason it takes two, three or four weeks due to any kind of logistic issue, you can lose confidence with your clients, which is a real issue.”
He argued that while data connections and networks were better and administrative work was more efficient “at the end, the wine is a real product, and it sometimes it has to be pond on the glass and drunk by the consumers”, particularly for fine wine client “for which the money is not an issue”.
van den Meiracker argued that his merchant business was “for a large part, a logistical business” and the key was efficiency in handling orders. One way around this was to look at basket size, which is where good growth margin can be generated. “If you sell on those marketplaces, sell everything if you can buy a bottle, because in the end, it’s, it’s about the market and the value of the basket.”
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