- It's been a busy quarter for emerging wine distributor Digital Wine Ventures (DW8), with a big sales bump and an ever-expanding business model
- As increasing numbers of people find themselves locked out of their locals and bored at home, the need for online and direct-to-consumer services is at a premium
- DW8 generated $182,423 in revenue for the March quarter — a 116 per cent increase over its $84,250 revenue reported in the previous quarter
- Digital Wine is taking a multi-faceted approach to expanding its services and increasing its customer base
- Five new executive appointees bring a wealth of sales, finance and logistics experience to the fledgling business
- Digital Wines is unmoved on the market so far today, with shares trading for 0.7 cents each
It's been a busy quarter for emerging wine distributor Digital Wine Ventures (DW8).
A growing market
As increasing numbers of people find themselves locked out of their locals and bored at home, the need for online and direct-to-consumer services continues to grow.
DW8 CEO Dean Taylor believes transaction volume growth will only accelerate over coming months.
"Over the last few weeks, online wine sales have surged all over the world as the entire hospitality sector including pubs, clubs, nightclubs, restaurants, casinos, cinemas have been closed down," Dean explained.
"Consumers still want to drink but they are doing whatever they can to avoid visiting busy shops and shopping online is the best way to do that."DW8 CEO Dean Taylor
"It’s therefore no surprise that we’ve seen a lift in the number of orders processed over the last few weeks. I expect this trend to continue over the coming months, as more and more wineries embrace solutions like ours to help them trade through these current difficult conditions offering their customers a quick, cost-effective and reliable delivery service," he added.
DW8 generated $182,423 in revenue for the March quarter — a 116 per cent increase on its $84,250 revenue reported in the previous quarter — the company's maiden trading period. Given this increase in what's traditionally the sector's quietest quarter, things are looking up for DW8.
Digital Wine is continuing to expand its services and increase its customer base. The company's approach to increasing its market potential is multi-faceted.
Significantly, DW8 has been granted a liquor licence, enabling the trade of products from one business to another with DW8 as the middle-man. This business-to-business (B2B) trading model will form a big part of the company's strategy - and revenues - going forward.
Dean Taylor says DW8's current model relies almost exclusively on their logistics solutions to generate revenue, but when the B2B marketplace goes live later this year, the trading fees involved will become a cornerstone of the business.
"Over time trading fees should become our largest and most profitable revenue stream while allowing us to substantially increase the average yield generated from orders processed via our platform," Dean noted.
"The vertical integration of our trading, order management and logistics businesses is what makes our model unique and puts us in a very strong position to counter any potential competition," he added.
The company is also making adjustments to how it handles stock and ordering. Currently, DW8 employs an end-to-end arrangement, where the company takes stock deliveries to its centralised bulk storage depots and distributes to consumers from there. With the introduction of a direct-to-depot (D2D) model, suppliers will be able to deliver product to the local depot of their choice.
This means larger suppliers can use existing infrastructure and systems, while gaining the commercial advantages of a relationship with DW8.
Likewise, for smaller distributors — who often do the bulk of their business in one state — it saves shipping costs but allows for a greater market footprint. The company expects about 50 per cent of all new customers will use the new service when it is officially launched in July.
Digital Wines has announced a number of personnel additions in the hope of bringing greater expertise and experience to the business.
The company announced the appointment of Steven Alexander as Chief Operating Officer of its WINEDEPOT business a month ago. Mr Alexander has a proven track record over almost 20 years in simplifying complex supply chains, uncovering efficiency improvements, and reducing operating costs. DW8 believes his knowledge will bring an extra edge to its cloud-based supply logistics platform.
A number of other senior executives were also appointed around the same time to bring added expertise to the DW8 sales, technology and finance teams. The appointees bring experience from big companies like Dan Murphy's, Coles, American Express and Westfield. The company hopes the injection of fresh blood and deep experience will help usher in a sustained period of success.
CEO Dean Taylor says it's an exciting time for the company.
"Over the last few weeks, wineries big and small have also watched as their export, trade distribution and cellar door markets literally collapse due to the devastating impact of COVID-19," Dean explained.
"With no sign of these markets reopening in the near future, their only hope is driving sales through online and direct-to-consumer market segments," he continued.
"Fortunately this is their most profitable route to market and right now there’s exponential growth due to the massive surge in online purchasing."DW8 CEO Dean Taylor
"This places WINEDEPOT in a strong position as our platform caters predominantly for wineries generating sales in these sales channels," Dean stated.
"We are in a unique position that the outlook for our business over the next six to 12 months is very optimistic," he concluded.
Digital Wines is unmoved on the market so far today, with shares trading for 0.7 cents each as at 11:35 am AEST.