In this week’s preview of our annual conference, Internet Retailing 2011, Rowan Gormley of Naked Wines tells us why his business could only have been launched online.
It’s just three years since Naked Wines was launched, but it’s on course to turn over £20m this year. It now ships, says its founder Rowan Gormley, 10,000 bottles of wine – the equivalent of a bus full of wine – every day. That’s fast growth indeed.
But why has it been so successful? For Gormley, the answer is all to do with the approach Naked Wines has taken to the internet. “We’re not just taking an offline business and sticking it online,” he said. “It’s a genuine 2.0 business model and a 2.0 website – that gives us a sustainable competitive advantage that noone else can copy.”
That 2.0 business model sees winemakers using the site to sell directly to the customer. They can pitch their wines directly to potential customers, while customers deciding which wine to buy can read reviews, recommend the opinions of other customers and follow them in the hope of good recommendations in the future. Having drunk their wine choices they can then add their own reviews and ratings as well. Social media, in other words, is not just an add on at Naked Wines – it’s in the fabric of the site.
And all of this works, says Gormley, because it makes the wines more affordable, taking the stress and cost of marketing out of the equation. Gormley argues that wine makers who don’t need to be “international wheeler dealers” can now concentrate on making better wines for their customers. Gormley said: “So much of the cost of a bottle of wine is the cost of selling it. It’s avoidable cost, it’s money that really doesn’t need to be spent. If you can’t taste it, it doesn’t add to the quality – just to the cost. If the customer has committed to buy the wine in advance and don’t need to be sold to, the winemaker doesn’t need to waste their time or money selling, they can spend their time improving the wine instead.”
He believes this is a model that can easily be transferred to other sectors. Take the restaurant sector. Currently diners in independent restaurants pay for the unsold tables in a restaurant through higher prices, argues Gormley. Build a model that sees those tables sold, and not only should prices come down but the food, made by a less stressed chef, should be better.
Gormley is not sure that he himself will move beyond the wine sector, however. “We’re really wine people and so much of the business is not about selling, it’s about building relationships with the people who make the wine.”
Instead, he’s looking to future developments in mobile commerce. The rise of the smartphone, he believes, is set to herald some interesting developments since, “for the first time consumers will have a computer in their hand at the point of purchase and the point of consumption. That’s going to bring some pretty profound changes, I would have thought.”
Rowan Gormley will be speaking at Internet Retailing 2011. The event is at the Novotel Hammersmith on October 4. His presentation. Evolution of Business Models, is in track three at 4.15pm.