Bordeaux May 15, 2019 – The revolution in digital retail is already changing the whole producer-to-consumer landscape and the way consumers buy wine and spirits – especially wine. Recognising the importance of the rapidly evolving digital retail marketplace, Vinexpo’s pioneering ‘What it takes to sell wine online’ E-Commerce Conference lined up six leading CEOs of top wine ‘e-tail’ companies around the world to impart their knowledge, experience and expertise, and the changes they anticipate over the next 10 years.
Moderated by Gerard Spatafora, MD of E-Studi’oz.wine, the five leading CEOs that made up the panel – Chris Tsakalakis, CEO of Vivino; Marco Magno Cavallo, CEO of Tannico; Mark Meek, CEO of The IWSR, Mike Hu of China-based Alibaba Group~Tmall FMCG Business Unit, and Martin Ohannesium, CEO of «Le Petit Ballon» were invited to consider different models and approaches to e-tail, offering their unique perspectives on each.
Chris Tsakalakis of Vivino suggested before a company considers adopting any e-tail approach to becoming a digital retailer, they should ask themselves: ‘do I really want to compete directly with conventional retailers already selling my product ?’ Adding a word of warning on the range of activities a company has to consider as part of the digital retail offer, in this instance the logistical side, he said: ‘Vivino sets the standard for every retailer on its site in order to get them to ship as efficiently as we need them to for every single purchase. If the retailer doesn’t match up to that standard – every time – we remove them from the site.’
Different approaches and business models were considered, for example:
• The subscription model is a win/win for customers and businesses; for businesses, it scales better, is easier to run and guarantees recurring revenue – but is a monthly subscription plan the solution?
The moderator asked whether it was easy to manage this particular business model… Martin Ohannesium of «Le Petit Ballon» responded: ‘Yes, we are working not with thousands of retailers but a selection, so we are managing fewer bottles. Fewer bottlers, fewer retailers. But, it is important you really know your buyer profiles so you can match the product to the prospective buyer.’
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• Big data: should companies become data-driven to better serve their changing client tastes and, as a consequence, their changing purchasing requirements?
The fundamental question for companies here is: how do we deal with the data, how do we use it best in a digital retail context ? Chris Tsakalakis said this was no easy task, putting that into perspective with the sort of numbers Vivino is dealing with: 10 million+ wines in the database, 800 million scans of different users and the choices they made. « These are huge numbers, but Vivino has used them to create personalised taste profiles matched against review ratings, so for example, a specific customer could be asked how much tannin do you want in your wine ? »
For producers, this sort of data could be invaluable. The panel noted that retailers/producers more often than not simply did not know the answers to critical questions like:
- how often are my wines being scanned ?
- where is my product going ?
- who is drinking it ?
E-tailers can supply answers to these questions through their data to help retailers understand better what is happening in the marketplace, and thereby build stronger relationships with producers – which obviously would have great value for them. Mike Hu said that they were already working closely with brands to answer these questions.
• Direct-to-consumer business for wineries: more and more wineries are now selling direct to consumers, especially in the USA – how will this trend affect e-commerce?
The moderator asked how this model works, in reality ? Marco Magno Cavallo said that wineries choose which product to sell at what price, and then Tannico manage everything from there, creating an omni-platform to take care of every aspect of the producer-to-consumer cycle: the warehousing, payment, customer delivery and aftercare service post-payment.
Chris Tsakalakis added that in dealing with wineries direct, Vivino can save an astonishing 25% on the logisitical, demand-and-payments, warehousing and delivery components of the producer-to-consumer cycle.
• What’s next?
The moderator asked: what will E-commerce look like, upcoming? Mark Meek of The IWSR (International Wine & Spirits Research), Vinexpo’s data partner with the most historic and comprehensive data records in the industry going back 40 years, had an insight that prospective e-tailers should take note of:
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‘With the advance of smart device technology, consumers are making less and less choices. Their mobile devices are making more and more brand decisions for them. But this trend will only impact at the lower end of the market because consumers will still want to make their own high-end brand choices.’
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Since its establishment in Bordeaux in 1981, on the initiative of Bordeaux Gironde’s Chamber of Commerce and Industry, Vinexpo has been a leading organizer of events for the wine and spirits industry. In 38 years, Vinexpo has developed a unique understanding of the market and an extensive network of key distributors around the world. The brand currently runs exhibitions in five set locations (Bordeaux, Hong Kong, New York, and soon Shanghai and Paris), and the touring event Vinexpo Explorer. Every year, the Group also publishes the Vinexpo/IWSR Report, which is the most comprehensive industry survey on the global consumption of wine and spirits.
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