Nick Martin, chief executive of Wine Owners, James Miles, managing director of Liv-ex, Jonathan Harclerode, chief executive of Bottlebooks and Elliot Awin, partner at ABS Wine Agencies were singing from the same hymn sheet as part of the London Wine Fair technology and business debate – How to succeed in a digital first post covid world.
“We have spent the last 12 years at least getting ready for this moment,” is how James Miles, co-founder and managing director of Liv-ex looks back on the last year and how it has finally transformed the way it is able to do business with its wide range of customers, both private and across a wine industry that for Liv-ex means it can do business in 42 countries.
“Clearly the dial has turned and there has been a massive shift” to digital says Miles who was sharing his experiences of lockdown, and the impact it has had on the Liv-ex trading model, during a special London Wine Fair debate that looked to get under the bonnet and the “nitty gritty” of digital trading. A session that looked at how businesses across the drinks industry can make the most of any increase in online sales, but also how automation and having the right systems in place can help power and enable your business to take the next steps forward.
(You can watch the full debate here)
Considering the level of success wine companies have had in selling huge quantities of wine online in the last year it might be thought they have the right systems and know-how in place already. But how much of that increase in demand for online wine just came through the door as consumers looked anywhere and everywhere to find wine and how much of it was driven by the merchants and businesses themselves?
Just how fit for purpose are companies management and IT systems and how much of those online sales will they be able to sustain once the on-trade is fully re-open and we all go back to our normal lives. That’s what this London Wine Fair session was all about.
Miles says it is understandable that “pragmatic” wine businesses, in the whole, are not “early adopters” when it comes to “high risk and expensive” new technology, but it has been fascinating to see the enormous impact the almost universal use of tools such as e-commerce, cloud based systems and teleconferencing has had on the sector over the last year.
Forcing companies’ hands
Nick Martin at Wine Owners, which provides a software as a service (SaaS) business management platform for the wine sector, powered by its Hub technology, says the huge move we have seen in the last year to digital has forced the hand of so many wine companies to not just track that “behavioural shift” but to do something about it.
“There has been a mental shift and I think businesses now understand the importance of looking at technology that is able to support their business goals,” he says.
“It’s where we have seen a number of businesses really recognising that they need to get their house in order, that they need to be significantly better organised and unplug a lot of their people from the manual activities that have built up over a period of time,” explains Martin.
For many that also meant “figuring out how you migrate your business fully online” and switching from enquiry based websites, particularly in fine wine, over to transactional DTC sites.
Suddenly by having so many orders coming through from e-commerce, businesses were then faced with the challenge of keeping up with those orders, whilst making sure they were not over selling on particular wines that were also being offered for sale through other channels, claims Martin. That’s where businesses have really woken up to the need of being completely on top of their “inventory and fulfilment” [ordering and availability systems] and streamlining their operations, he says.
In systems jargon that has meant an important strategic shift to “blended inventory models and stock feeds” and a move away from“a traditional ERP workflow that’s a hard coded sequencepurchasing stock and selling wine from a set inventory “just does not work any more”.
(Click below for Wine Owners’ Nick Martin on how drinks companies have been galvanised to take action with technology)
He turns to a quote from the Financial Times that he believes sums up what we have seen in the wine industry over the last 15 months. “‘Covid has enshrined cloud computing as the critical enabler of enterprise, innovation and partnership.’ That’s a lot of words but it does say it all,” he stresses. “Cloud computing has made it an awful lot easier for tech to re-configure around evolving business models – such as low inventory models, and a more blended approach to what you can offer through e-commerce and other channels.”
Visibility has been key
Elliot Awin, partner at the ABS Wine Agencies, says there was a fundamental necessity for businesses like itself to squeeze every amount of effectiveness they could out of their management systems. “Over the last 15 months turnover has decreased hugely so the only way to survive was to become more efficient,” he explains and freeing up staff to be selling and engaging with customers and consumers.
He says the switch to digital in the last 15 months has also brought into question the trading model of traditional wine importers and distributors and the need, as Martin says, for a business like ABS to have clear “visibility” on what he sees as three different “flows” in its business: information; stock; and cash flow.
“If you did not have good visibility over these three aspects over the last 15 months you would be really struggling to find out if you have got the right stock in the right place and the right content to give to our customers to help sell our wines,” he claimed.
The closure of the on-trade, in particular, has made stock forecasting, particularly on big volumes lines, so much harder as there were no past records to base it on, he says. Instead it was able to use its management systems to still keep on top of what stock was needed in which part of the trade – and when. Being able to work with a specialist management systems provider has also been invaluable in keeping on top of cash flow, he adds. “They will never allow you to fall foul of cash flow.”
If he was marking ABS’s performance in the last year on these three key areas then information flow would be the highest rated as it was able to react very quickly by producing regular online content, live Instagram tastings and interviews with winemakers for his wine merchant and on-trade customers to use for their consumers.
Stock management has been the hardest to maintain, he concedes, made worse by the extra pressure that Brexit has brought with the added lead times through the supply chain. The days of working with Excel spreadsheet are long gone if you are going to get the “granular visibility” that you need to get your stock forecasts right, says Awin.
(Click here for ABS Wine Agencies’ Elliot Awin on how technology is freeing importers to sell their wines more effectively)
Growing in confidence
Jonathan Harclerode at Bottlebooks, which has helped standardise and automate much of the data that is exchanged through the wine supply chain, says the last year has also been a challenge and an opportunity for suppliers like itself to take a step back and really analyse what new services the industry is going to need to help tackle the new digital challenges ahead of them.
The fact London Wine Fair was in a position to switch its fair 100% online in May 2021, in a relatively short period of time, when it was forced to cancel in May 2020, shows how far the sector, and its technology partners, have come come in the last year.
Harclerode likens the wine industry in May 2020 to being in a “holding pattern” split between making the investments needed to fully go digital, or holding out in the hope things would quickly go back to the way they were. Now in May 2021 there is universal agreement that a considerable amount of all our business is going to be done digitally now and in the future, he says, and the sector will be a lot more efficient and effective as a result.
“We have seen more and more investment going into streamlining digital processes from producer through to retailers and removing hurdles in the process,” he explains.
That investment is only going to grow the more confident the industry as a whole becomes in switching to online and digital support and the more common it becomes to do so.
He uses the example of an Austrian producer who pre covid was very anti technology who has seen the huge benefit there has been in running online business meetings and virtual masterclasses where everyone is focused in on that event, rather than being constantly distracted, say, at a busy trade fair. “That was very inspiring to hear,” he says.
Up in the cloud
We might not be able to see it but the power of computer management system is now key to business success
The debate returned to the issue of automation and how cloud based IT management systems are potentially a wine businesses’ best friend as they allow you to plug into a world that already exists. Separate systems that are able to talk to each and integrate their functionality using the cloud as their platform to do so. As a wine company you can just plug into that and take advantage of whatever joint efficiencies those systems are offering, explains Martin.
“It all makes automated processes a lot easier,” adds Miles at Liv-ex, who sees automation as being particularly important for the wine sector as it frees up staff to have the person to person contact that is so important for long term relationships to grow. “We have seen a lot more interest in automating or integrating with Liv-ex over the last few months,” he says.
He singles out Italy as a key case in point where producers rely so much on the on-trade and tourism for their trade. “They were looking for new routes to market and Liv-ex was something they could just plug into and automatically reach a big international market for their products.”
But to do so needed a “significant shift in the behaviour” of those producers to make the most of the opportunity.
It has also, for example, been able to work with a US retailer and massively increase the number of SKUs it can offer its customers by plugging into Liv-ex and its inventory of wines. So rather than have a range of 800 wines it can now sell up to 20,000 wines. Which, in turn, thanks to its wider reach on Google and Wine Searcher, it has been able to acquire more customers as well.
“They have seen a big increase in sales, but also, interestingly, a sharp drop in stock by as much as 80% and reduce the amount of cost it takes for every trade and their business has become a lot more scalable. It’s a good example of a customer that has used automation to not only expand their business but also to improve their cash flow and their margin. It almost sounds too good to be true, but shows what is possible.”
For this world of automation to really work it needs businesses such as Wineowners, Bottlebooks and Liv-ex to pool their talents and see how they can offer combined services that make the most of their individual expertise for businesses to tap into.
Martin says the days when businesses would invest in a one size fits all management system are gone. Now it is “a much more application specific, connected and collaborative world where the power of the network is going to become absolutely defining for this industry”.
All about customer service
(Click below for Bottlebooks’ Jonathan Harclerode on how technology can help deliver better customer service)
Interestingly Harclerode says the businesses it has worked with at Bottlebooks through the pandemic that have changed and adapted for the better are those who have customer service as the driving factor in everything they do and used technology to improve their customer service. “What is the customer service that you are trying to provide and how do you best provide it?” he asks.
For a producer that might mean its “customers” are its trade partners that are trying to sell their wine. How easy do you make it for them to download and use all the materials, content and background information they need from you to help them sell better. That is what good customer service can look like, he says. “Those customers are going to come back and ask for more stock, because you helped them be successful.”
Awin says this is particularly the case for importers and managing and showcasing their range – ultimately their stock – to their customer base. How easy are you making it for your merchants and wholesalers to see the wines you have available for them to sell without having to take on the extra costs of holding that stock themselves?
“With the visibility they have of our stock it means they can sell whatever they like,” adds Awin who says that, in turn, increases the level of engagement those merchants can have with their customers about the wines they can offer them which, like in the Liv-ex example, could mean offering them thousands more wines to choose from and engage with.
Awin says the opportunity is now there for enterprising bloggers and Instagram influencers to tap into importers databases of wines in the same way it hopes traditional wine merchant do and sell wine directly to their followers without holding any stock of their own. “That’s potentially very exciting and technology will allow that to happen,” he says.
New starters
Technology has allowed a wide range of new starters to come into the wine and drinks industry in the last year. Photo by Andrea De Santis on Unsplash
The last year has also given start ups the chance to “leapfrog” more established players in the wine market by simply having more effective and powerful management systems in place, claims Martin.
Miles agrees: “We have seeing a lot of new start ups and wine merchants looking to come in and build new businesses around these new technologies without any of the burden of the legacy of which a lot of the traditional wine trade need to navigate. I think there is a really exciting opportunity to move one’s business online, whether that’s e-commerce to reach a much bigger audience, or provide much better information to your customers.”
The opportunity is now there for wine businesses to really “make the most of cloud based systems – like Nick’s [Wineowners] or Jonathan’s [Bottlebooks] or ours at Liv-ex- in order to automate so much more of your business and make it much more efficient.”
There is certainly not the excuse for any wine company to be sitting back and watching the world go by as you run the risk of losing your place in an industry that is fast over taking you.
Providers raising their game
The demands of the last year has also raised the stakes on the technology providers to keep pace with what the industry, and their prospective customers, need.
“We have definitely had to step up our level of investment in order to support the level of customers who want to move into this new world and adapt our various services to meet changing requirements,” says Miles at Liv-ex.
He points to all the work it has done around Brexit and the systems and processes it has put in place to make the paperwork and trading as easy and as automated as it can be for its customers.
Martin says part of its service to its customers is making sure they are on top of and aware of all the services they can potentially offer them.
Key steps to get right
Martin says the last year has shown quite clearly how important curated content is for those looking to sell wine online. Be it the information being provided producers on their websites, to the analysis and data that might be available on the Liv-ex platform. “Content is so fundamental in driving buyer engagement and online revenues,” he argues, yet so much of the work being done online – some 50% to 75% – is being replicated time and again by wine companies, when so much of it could be standardised and automated.
“Inevitably we are a very big believer in industry specific software that is information rich and driven. That is a really important part of setting up your e-commerce.”
(Click below for Liv ex’s James Miles on why investing in good content is fundamental to a modern e-commerce strategy)
Miles agrees that is vital businesses are creating the right sort of content for what they are trying to achieve. “The great beauty of content is that it brings to life all the data. At its heart wine and business is all about stories and building a story around a product and trying to get customers too engage [with it].”
Good written content and data gives potential buyers the confidence and all the information they need that they are buying an expensive case of Petrus from an operator that knows what it is talking about, he adds. “It’s also what the consumer is expecting when they come on to your website. They are not just coming to buy, they are coming to be educated, to be given ideas. So content in a modern e-commerce business is absolutely fundamental.”
The opportunity is now there to use management systems that can automate a lot of that content for users when they research a particular wine, adds Miles. “That might include a product descriptor, a chart, for example, from Liv-ex, some pricing information, critic scores, tasting notes, a recent interview with a grower and other data so when a customer comes to actually make a purchase, or possibly on Liv-ex to sell, that they are making the best decision they possibly can do. We are investing in content as it is fundamental to any digital strategy.”
Content is key
Producing good content is a challenge that Awin and ABS have grasped with both hands. He estimates he has been able to talk to over 15,000 consumers over lockdown through a series of zoom tastings and Instagram Live events. “It’s amazing to see how engaged people can be with people telling a story,” says Awin who admits prior to Covid-19 did not have much, or any direct contact, with consumers about its wines being a purely B2B business.
Now it has seen how effective and important it is for wine importers to play much more of a direct active part in talking about and marketing their wines to consumers and creating the interest and demand for them to then go and potentially buy those wines through their merchants and in the on-trade. So rather than be behind the scenes, one step removed from the process, they can play a crucial sales and marketing role too.
Martin also says it is crucial companies don’t regard their e-commerce and inventory as two separate investments and systems, particularly if their e-commerce offer is part of an omni channel operation as they all need to be interconnected and working in harmony with each other.
Being able to produce good quality content is also now vital for e-commerce companies to bring customers to your site
Harclerode agrees and says ultimately companies need to take more of a holistic view of their businesses and what they want to achieve. It’s why Bottlebooks and Wineowners are working together to “so that there is an option there were you have the content and the inventory and logistics and the commercial systems seamlessly integrated under one roof”.
That interconnectivity is something we are going to see far more between businesses in the wine industry, stresses Martin. The wine industry already prides itself on being a relationship driven sector, the next logical step is to invest in the management systems that takes to another level.
“Interoperability – that is the ability of one business to talk to another business digitally creates certainty and a network effect and it expands the size of the prize for everybody.”
Standardising how businesses exchange information between each other is very much singing from the Bottlebooks hymn sheet. Which at its most basic level is creating a digital alternative to Excel and email and taking the repetitive tasks that all businesses do out of the equation and freeing up people’s time to concentrate on the more value adding tasks that often get neglected.
“That is what technology can deliver so you can focus on the more value adding stuff and the things that can really drive your business forward,” he says.
Being connected
“It’s just a very exciting time,” adds Miles, and an opportunity for businesses to be more connected than they have ever been before thanks to cloud computing that essentially democratises data and makes it freely available to anyone you want to share it with.
This is technology enabling businesses and individuals to achieve far more than they could do before and focus 100% on “what we are best at”. “It allows us all to become much bigger businesses and to provide a much better service and experience to our customers,” he says.
Which is certainly what ABS is looking to use automation for, says Awin, for its ordering, stock management, picking and logistics. “Automation has to be there so that we can do things that are valuable to the consumer rather than what are just really requirements.”
Harclerode concludes by stressing it might sound like they as technology providers have all the answers, but they too are “just at the begging of the road that the industry is going to be taking” and there is now room for businesses to take more risks, and that we can evolve together in how we learn and grow, which in the first instance will come down to what can be standardised and automated.
“The good news for everyone in the sector,” summarises Miles is that “this technology is getting cheaper and more accessible even for relatively small businesses like ours”.
Awin has this final warning message to other importers: “There is a danger of the agency model disappearing, but it just means our role is changing,” he says. Rather than being known as having a large portfolio with endless stock, it is going to be much more about having the right stock available and “creating content so that we can manage this stock flow, this information flow and cash flow, so that the last person before the consumer can just sell is for the most important thing. It looks like technology will allow us to do that.”
