GraysOnline, the Australian online retail and auction company, recently separated its wine offer through the stand-alone GraysWine.com.au. The general manager of the Grays wine division is Simon West, somebody with a lot of ‘skin’ in the wine industry. In a Q&A with Nathan Gogoll, West explains his background in sales and marketing and details how GraysWine wants to work with the wine brands it sells.
Tell us about your career in the wine industry:
Simon West: During my uni days I was working at Northgate House in SA as a barman at weddings. Northgate House was owned and run by Vili and Rosemary Milisits of the ‘Vilis’ bakery enterprise. After my Saturday night shift, Vili would often let me go down to the cellar and choose a wine to share with him.
Eight years with global giant Procter and Gamble dealing with the major retailers, gave me a solid foundation to step into the wine industry. After several years with various wineries in sales and marketing roles, I commenced Fullglass, a consultancy service that provided sales, marketing, branding and strategy advice to wineries, with a big focus on exporting. During this time, I was lucky enough to meet the late Stephen Lumb of Oddbins wine auctions, and I became a sponge to his gentle and non-intimidating approach to wine education. He made a big impression on me and opened my eyes to the way we should be talking to the consumers.
I had a lot of fun over 10 years with various successful projects… helping Sparky Marquis develop and launch Mollydooker globally; launching a unique wine brand in the US called ‘Pizza Red’ with the late Peter Brown (another true gentleman of the industry taken too soon) of Brown Brothers fame; and developing some crazy labels and wines with the Redheads crew in McLaren Vale.Every year I also source, blend, package, and ship several wine brands to my business partners in British Columbia in Canada. I love this as it enables me to keep in touch with the wine industry at a grass roots level.
In more recent times I was representing a client selling to Grays and experienced the process first hand. It was really interesting for me as I saw it as a really solid channel to go to the consumer without having to deal with the major retail chains in any way.
Did this prepare you for the role with Grays?
SW: My experience over the years has been quite broad. As well as being competent with sales, marketing and branding, I have needed to keep an astute financial grip on every deal performed whilst showing a strong understanding of the entire wine making and production process. The secret to success is understanding the consumer. I only entered markets where I knew exactly what the consumer was looking for (and they are all quite unique!).
In my role as General Manager at Grays, I am able to share a lot of those skills to my team and steer the marketing focus to what the wine consumer truly wants.
How has the Grays focus on wine changed since launching a wine specific web platform?
SW: The launch of GraysWine has been five years in the making for the Grays eCommerce Group. The wine category has built up a strong value proposition over many years and we felt the timing was right to spin the web site off so it is truly recognised as a wine destination. The wine team is focused on supporting long term wine partners and attracting new winemakers to deliver on our promise to our customers. The GraysWine launch illustrates to our customers and our wine partners we are responding to their feedback on how to improve our service and overall experience.
If you were to conduct a survey and ask wineries how they perceive Grays, they would probably mention the words ‘a clearance outlet’. That was how the online business launched back in 2004, but is a very different beast today. Every month we have approximately 300,000 hits to our website, more than 2500 cases of wine sold per day (yes, that’s not a typo), and have become one of Australia’s largest wine online retailers.
Our uniqueness is the ‘auction’ model and I remind our team we should never lose sight of this.
What sort of consumer data have you been able to access, in order to tailor the new wine-only platform appropriately?
SW: Being 100% online allows us to clearly understand customer behaviour with all on site and transactional behaviour captured and stored in our large data analytical systems. We understand varietal and regional preferences, frequency of purchase, acceptable price points, likelihood of referral etc. All of this data allows us to tailor our communication and on site product recommendations to better align to a customer’s interests.
The nature of auction means we only have one winner per item and so if that item reappears in our stock listing we are able to communicate a very targeted message to underbidders connecting them with the wine they were so keen to buy.
This also means we can target specific EDM’s (Event Driven Marketing) to them.
You are looking at increasing the winery-driven content. Can you tell me the sort of content that has been most popular since the launch?
SW: The previous GraysOnline wine site was quite cold and industrial. Unfortunately, we occasionally saw that other products in our offering would come up in a wine search and appear amongst the wine tiles.
We recently engaged an agency that looked closely at our positioning and messaging. The end result was to ‘provide the consumer with a guided discovery’. It was quite obvious that in order to maximise this we would need to have a standalone site that could handle the additional content we would need to provide this ‘guided discovery’.
I have armed my team with iPads so they can all take photos and video content at the winery and upload to our team Dropbox account. From there, we can load video clips into our generic template and then on to the chosen wine page. My vision is for the consumer to navigate their way to a wine that attracts their attention. They can see an image of the wine, read some information (both from the winery and some thoughts from our team), click on a 45 second video that will bring the winemaker or winery to their home which will in turn encourage them to purchase on our ‘fixed price’ offering immediately or bid more for an auction wine.
Grays has become an ecommerce leader in speed of delivery to the consumer. Once you buy our team will have the wine picked and packed by the next business day and collected by Toll for delivery to their front door. This is all part of the process for the consumer to discover ‘their next favourite drop’.
Finally, we have some exceptional staff members with a passion for wine like no other. We need to do a better job of using their knowledge to assist our consumer base with their decision making process. Watch this space for more staff ‘panel’ picks and important commentary from our team.
What are the different processes for the wineries when they participate in an auction compared to ‘buy now’?
SW: There are several platforms for selling your wine on GraysWine…
2. Fixed price/Buy Now
3. Private cellar/Fine Wine (either auction or fixed price)
Online auction represents 75% of our sales. The wine will be freighted into our Lidcombe NSW warehouse on consignment and programmed into our system. Grays will provide the warehousing free of charge. The wine is then ‘lotted’ on our site and sold as a full case. Grays will pick, pack and freight to the consumer within days. Grays receive the money from the consumer, the commission and small admin fee is deducted and the balance is transferred to the vendor within 10 days. The majority of auctions start at $9/case. This makes it pretty much ‘unreserved’. Bids are placed at $5 increments. We have found that known brands with a good following sometimes bid up and over the average RRP you will see in the marketplace. We have recently commenced a $109/case start program. To use this method we make sure the wine meets certain criteria. It effectively means the vendor has a ‘guaranteed’ start price to protect their return.
Fixed price occurs in much the same way except the pricing is ‘fixed’. We ship direct from our warehouse or via a ‘dropship’ agreement with various distributors. Once again, a commission fee is deducted from the sale price and the balance is transferred to the vendor.
For the Private cellar/Fine Wine, our fine wine buyer will seek out rare and special parcels that fall into this category. It could be from liquidations, deceased estates, insurance claims or just and investor wanting to ‘cash out’ of their valuable wine holdings. We have a special high value part of our warehouse that handles these sales and quite often you will see single bottle sales appearing.
We also offer a ’30 day money back guarantee on all auction and fixed price stock (unless we clearly state there is no guarantee due to the history of storage conditions not being clear).
Can you tell us what wine styles and price points are most popular and what price points/wine styles are showing good growth?
SW: As mentioned, our extensive data bank allows us to have a clear understanding of what our customers like to drink. Our demographic of very loyal customers also sow they are predominantly males aged between 36-65 years of age. These buyers are comfortable with buying wines from the well know regions and can affiliate with the well-known varietals… i.e. Barossa Valley and McLaren Vale Shiraz, NZ Sauvignon Blanc, more recently we have seen some terrific interest in our French imports and sparkling Cava out of Spain.
Prices vary significantly depending on the varietal and prestige of the wine.
In fine wines, the end of August 2014 saw our largest individual sale of Penfolds Grange. The collection came from a wine industry stalwart that owned many bottleshop’s outside the Sydney region during the 80s and 90s. In the mix was a complete set of Grange magnums from 1979 through to 2005, plus another five decades ranging from 1955 through to 2005. The sale of this collection of Penfolds Grange grabbed the attention of drinkers and wine buffs worldwide. Both the Decanter magazine and James Halliday magazines featured pieces of this sale on their online daily news and it was picked up by the Fairfax press. The extra publicity ensured that we achieved maximum results for our vendor, the magnum set sold for more than $30,000 to, of all bidders, Penfolds themselves to be featured in the revamped Magill Estate cellar door. It was honour to hand the wines back to the custodians of this most famous wine brands.
The much underrated 1970 sold for a whopping $715. Straight cases still in the original wooden boxes surpassed our expectations. 1990 sold for $3400; 1991 for $2550; 1993 for $2350; 1994 for $2500; and 1996 for $2950. All up, more than $75,000 worth of Grange was sold in one sale.
Are your wine buyers keen to find new partnerships with wineries that haven’t done anything with you so far?
SW: Absolutely. Like all sales channels, critic reviews, medals or any type of media helps ad credibility to that particular wine.
Our customers told us in an extensive research survey they love discovering new wines that they have never seen before. In fact they prefer the new wineries to the bigger branded companies. Our job is to keep introducing new varietals and regions so that our customers travel with us around Australia and the world trying new wines.
Product ratings by our expert wine panel are extensively visited by our customers. All wines listed on our site go through the screening process by our expert wine team before they are cleared for sale on our site. Notes and comments are captured by our internal wine specialists and included on site for the benefit of our customers. Where available we will call on industry reviews as well as those supplied by the winery.
We find our wine drinkers all have their own view on each wine and we see this expressed in their product reviews.
Online liquor sales are achieving year-on-year growth of around eight per cent at a time when the overall market is flat? Do you expect Grays do match that growth rate?
SW: Online retail has been growing rapidly for many years across many categories. Online sales in the Wine category to some extent has been slower than other categories we have experience in, although wine is fast catching up. In our experience online sales growth all comes down to accessing product that customers really want coupled with a convenient end to end customer experience. We deliver more than 50,000 cases to customers each month around Australia with the vast majority of orders delivered within two working days of the order or auction being won.
The GraysWine launch is timed to tap into the shift in behaviour where wine buyers are researching and buying more and more online. They are looking for new wine experiences, they enjoy the search process and they are looking for great value.
What advice would you have for a winery that has never sold through Grays, but was thinking about testing the waters?
SW: GraysWine has more than 300,000 visits per month from customers interested in discovering new wines. We offer a terrific channel to reach an informed wine community and introduce their product. We have found mixed cases are very popular to introduce a new winery to our customer base and then they come back to buy straight cases of their preferred varietal.