Member Exclusive   //   May 1, 2020

How wine seller Winc is building out its digital business to acquire new customers

By Gabriela Barkho

For years, the grocery and alcohol delivery industry struggled to break into the mainstream.

More than ever, thanks to strict social distancing measures, Americans are adopting e-commerce as a way to keep essential supplies on hand. Before coronavirus, online grocery represented less than 5% of the total U.S. sales — now that’s likely ballooned beyond 20%. But with the delivery boost’s culprit being primarily emergency shopping, services are now faced with the challenge of extending their popularity beyond the pandemic.

This is especially tricky for digital wine sellers, as the industry has traditionally been dominated by a select few producers, whose consolidation has helped drive massive store sales. Competing on the shelf has obstacles, but digital branding and delivery can help democratize the space among wine brands.

At this week’s Modern Retail+ Talks, DTC wine brand Winc’s co-founder and COO Brian Smith explains why it’s important to already be planning for customer retention and a path to profitability.

What we learned:

Harness this opportunity to digitally “meet consumers where they are,” which is on their phones and at home.

Plan for the future now by monitoring new customers’ diverse data across markets to understand their needs down the road. 

Profitable growth is a real challenge heading into a recessionary period; all decisions must be made with good financials in mind. 

Think nimbly and have a diverse strategy that’s ready for big changes

  • “Being omnichannel” is an expensive pursuit that’s built over a long time, said Smith. Over many years, Winc grew from being an online wine shop, to a wine producer, to even becoming a national wine wholesaler. But the investment allowed for quick, flexible re-allocation of resources to capture and fulfill demand — which has helped the business grow over the last few months. Smith added this approach helped speed products to market.
  • “Operation efficiency” is vital, especially in avoiding breaks in the supply chain that can result in fulfillment delays. Safety across the entire chain is important, Smith said, as well as keeping an eye on all facets of it — even where and how boxes are sourced.
  • At the same time, don’t rule out any channel — even Amazon. “I’d get into any business with anyone selling wine,” said Smith.

Online grocery’s growth depends on keeping new adopters

  • The longterm winners will be the ones that stand out. Brand loyalty will become even more important as companies consolidate and private label competition gets more fierce — which historically tends to happen during economic downturns. “It’s important to build out brand differentiation,” said Smith, in order to keep your customer base from moving onto a cheaper, generic version of their Sauvignon Blanc, for example. “This is the real challenge for our creative team.”
  • An uncertain economy and high unemployment rates mean people will probably buy cheaper wine. To sell the more expensive bottles, Winc is exploring with loyalty programs. But it’s also keeping thriftiness in mind; “most of our wines are in the $13.99 to $18.99 range,” said Smith, which is an effective price point to keep sales leveled during a recession.

Find ways to engage with your customers — even if they seem ludicrous

  • Most restaurants and bars are closed. This means brands are given the task of “re-imagining at-home consumption,” said Smith. For companies like Winc, this is a great opportunity to showcase ways people can use your product in the safety of their own homes, whether it be through on-demand delivery or educational tutorials.
  • To increase retention, Winc is focused on upping customer communication and digital engagement. This current climate allows for creative virtual engagement that may have “seemed ludicrous” pre-pandemic, including streaming  tastings and happy hour gatherings. 

 

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