How using a 'lite' business model for its overseas expansion saved Vinomofo years and millions

Photo: Vinomofo/ supplied.

Before branching into a new market it’s important to have all bases covered. But what happens if you are branching into a group of markets all at the same time?

This is the challenge Australian boutique wine e-retailer Vinomofo is about to tackle.

With plans to expand the business, originally the wine group was going to focus on just one market – China. But soon it realised how long it would take to grow globally, taking one market at a time.

“If you go all in on one market, you need to see traction and you need to see it grow and start to turn money over toward profitability, so you can take that investment and put it into a new market,” co-founder Justin Dry told Business Insider.

“If we did it that was going to take 50 years before we got around the world.”

Looking for other possibilities, the Vinomofo team came up with a new, more flexible business model that would let them reach more markets, faster.

In other words, they saw the ‘lite’

“So then we can up with this idea of a lighter version of Vinomofo,” Dry said.

“[Using it we could] roll out in 10 countries straight away, where we can test each of those markets to see how they took up our proposition.

“It also meant that for the same amount of money we could test all of those markets to see if there’s traction and follow that with teams on the ground.”

Co-founders Justin Dry (L) and Andre Eikmeier (R). Photo: Vinomofo/ supplied.

To do this Dry, co-founder Andre Eikmeier and the Vinomofo team broke down the data to decide where their initial markets would be.

“We looked at the whole world basically and we said what are markets that are interested in our products? What are markets that have difficult systems from producer to consumer and what are the markets that are consuming a lot of wine, and are fast growing countries?

“We looked at where traffic is coming from for our site at the moment. We get a lot of overseas traffic even though we only have an Australian offering.

“And, we did a lot of travelling. We travelled through the States, the UK to try and understand those markets, we talked to lots of people within those markets, we read all the research we could find on those markets, the growth trends – who was buying and how they were buying – to come up with the six markets that we have decided on as a ‘first step’.”

As a result they settled on Singapore, New Zealand, Hong Kong, China, US and UK as a starting point.

So what exactly does a lighter version mean? Well, according to Dry it’s “basically it’s like a container sale.”

More to point, Vinomofo has created a region-specific website where sale events are held every couple of weeks. In the lead-up to these events, customers will have access to a countdown which, once complete, will reveal the selection of wines available.

“The event will be on one day where a set amount of wine is available in each market,” Dry said.

“A container load, maybe more, maybe less depending on the traction in market, will be available on the ground, ready to send out when people order it. It will available for a limited time or until everything is sold out and then the next countdown will begin.”

Once a market builds up enough of an audience, Vinomofo can then make the decision to deploy a team on the ground.

“This way we’re going to try out six countries in a short period of time… and we’ll follow the traction to establish teams on the ground based on demand in the market.”

And better yet, this lighter version of the business is a lot cheaper.

“When we were only going into China we were looking at a million plus as a starting point,” Dry said. “This light version of going global is costing far less. All we’re doing it setting up partnerships and buying one container for the market.

“It will be far more expensive once we get the traction but it’s a far less risky bet.”

The landing pages are already live in each market and Vinomofo is taking on members. Before the first sale event — which Dry anticipates will be held in March, or early April — wine stock is being bought, overseas licenses and partnerships are being established, and the team’s global lead is visiting each market to ensure the model fits each place.

More markets, more challenges

But with more markets comes different consumers, and with more consumers comes various needs.

To cope with this Vinomofo will “be mimicking the market as it exists,” says Dry, as well as suggesting some beaut Australian wines.

Photo: Vinomofo/ supplied.

“For example they drink a lot of Californian wine in the States,” he says, “So when we go to launch in the US there will be a big portion of American and Californian wines.”

According to the data coming out of China, the locals drink mostly French wine, but the highest valued wine was Australian.

Overall, Dry said the wine business will be continuing to offer it consumers a high-end, highly curated wine selection, the reason why it has achieved such success in Australia.

“At any one time we only hold 60 to 80 wines on site, and that will go to around 150 top end,” he said.

“If you’re interested in learning about really interesting wines, with great stories and passionate people behind it, then here’s something you should try based on what you like, based on your preferences, based on what you’ve shown an interest in.”

Since launching in their garage in Adelaide back in 2011, the company has attracted 406,000 members, sells 30,000 cases monthly and has hit an annual run rate of $60 million.

Now read: Vinomofo is getting into the gourmet meal delivery service

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