This online retailer uses technology to deliver an enjoyable shopping experience to its customers. Rich Bergsund, CEO of San Francisco, Calif.-based Wine.com, said his team’s overall strategy is the same now, despite a down economy, as it has always been. “In any economic climate, the most important aspect of our strategy is to know who our customers are. From there, we can do our best to be great at providing them with the experience they want,” he said.
However, one thing that does change in a down economy, Bergsund said, is the specific product selection needed to keep customers satisfied. “With every decision we make, we start with the four pillars we’ve built the business on: selection, value, convenience, and information,” he explained. “In this type of economy, we tweak each of those with cost-efficiency in mind.”
Within the pillar of selection, for example, the team at Wine.com has made sure it stocks a greater assortment of reasonably priced wines as of late. The company’s selection of wines costing $20 or less with ratings of 90 points or higher has been very popular throughout the last year.
Bergsund said the company’s team has been scouring the world for wines that fit into this category. By getting its buyers deeply involved in the process, the company has doubled the number of wines on that list, and that expansion has driven a lot of growth this past year.
Although it has seen tremendous growth in this area, Wine.com has made a conscious effort to not segregate customers looking to buy high-end products. Bergsund said there’s still a demand present for highly rated and acclaimed collectible wines, which sell for anywhere from $40 to $100 and beyond, per bottle.
“We recognize there’s still a demand for this type of wine, and we felt underrepresented with our collectible customer base, so we recently added customized services where collectors can call or e-mail us for suggestions,” he explained. “As a retailer, it all starts with selection because if you don’t have the right products, nothing on the experience side really matters.”
Although it’s primarily an e-commerce business, Wine.com does have two retail stores it operates out of as well, one in California and one in Connecticut. To a certain extent, the retail operations act as buoys for the e-commerce business, giving its team an opportunity to experience face-to-face contact with customers living on the East and West Coasts.
“The stores are fairly new within the last two to three years,” Bergsund said. “We’re a Web-based company through and through, and although we aren’t looking to expand the retail base anytime in the foreseeable future, the stores do add value to our organization.”
In addition to its headquarters and its two retail stores, Wine.com has seven warehouses spread throughout the US. Because there are certain restrictions in some states regarding the shipment of alcohol, the warehouses are strategically located in states that require a local presence for shipment.
“An example of this would be New York. By state law, we’re not allowed to ship a bottle of wine from California to New York, so we have to have a warehouse and a wine license in New York if we want to do business there,” Bergsund said. “Although it’s a necessary evil, it also helps because it makes us fast. We can deliver to 90% of New Yorkers in one day by ground service. This improves our delivery speed and accuracy, as well as our rates.”
As a businessman who operates both retail and e-commerce operations, Bergsund is familiar with the advantages involved with both. And regarding selling wine, he said e-commerce is the way to go. An e-commerce platform allows Wine.com to provide its customers with many things not readily available in a retail store. One great example of this is a ratings system.
“There are certain things that software systems are really good at,” Bergsund said. “With our systems, we gather information from eight publications that detail what a number of critics have to say about a specific bottle of wine and what ratings it received.” This type of gathering of information is nearly impossible to do at a retail store—even through an e-commerce platform, it’s still relatively labor intensive.
Customer reviews are also pretty common on Web sites but not really tangible at a retail location. At Wine.com, customers can read through past customer reviews and sort lists by price, vintage, or popularity, among other things.
“Another thing we can do that’s difficult to do in a store is pull up a specific query for a customer,” Bergsund said. “If someone walks into a store and asks to see all Spanish reds under $18 with a rating of 90 points that are a particular vintage, it’d be a challenge to do, but with our database, it is easy to do on our Web site.”
When all is said and done, these types of services help make Wine.com a success. Bergsund is well aware of this, and as a result, he keeps a very talented staff. “As an e-commerce business, we have to be knowledgeable about the product we sell, but we also have to be good at managing the software side. We’re an IT company as much as we’re a wine company.”
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