‘Beginning of a new era’ for Vinomofo
Vinomofo has come a long way since brothers-in-law Justin Dry and Andre Eikmeier started the direct-to-consumer wine business in a garage in Adelaide seven years ago today.
What was once an Australian-only wine site now has global sites in New Zealand, Singapore and – soon – the US. The team has also grown to more than 100 employees and moved headquarters from South Australia to Melbourne. And Dry and Eikmeier are starting to make decisions around long-term growth, rather than operating in survival mode like in the early days.
“We’re launching a brand-new welcome series [of emails] today and we’re going to start emailing people much much less,” Eikmeier told Internet Retailing.
“We’re pretty excited about that – a lot of work has gone into the brand experience and finding the places for it be more human and personalised. It’s the beginning of a new era,” he said.
Eikmeier is confident that such changes will power the company’s next phase of growth – long-term, sustainable growth from loyal customers, rather than constant acquisition driven by price and marketing.
“We will make less revenue the minute we start sending fewer emails, but we’ll also lose fewer people and over the time, the people [who stay] will make up for that loss because they’ll love the experience and be more loyal,” he explained.
“We have to back that journey,” he said.
Glaucus claims unfounded
Vinomofo’s strategy has faced greater scrutiny in recent weeks, after US-based hedge fund Glaucus said Blue Sky, the venture capital firm that backed Vinomofo to the tune of $25 million in 2016, had overvalued its investments.
Glaucus released a report earlier this month that said Vinomofo had missed Blue Sky’s revenue forecast in 2016-17 and “continues to burn cash at a torrid pace”. However, Eikmeier told Internet Retailing on Wednesday the claims were unfounded.
“They reported that we raised $25 million in cash [from Blue Sky] and are down to $2.5 or 3 million, assuming that we must have burned through it. But most of the money [from Blue Sky] went to buy out existing shareholders. We didn’t raise that much capital for the company,” he said.
Eikmeier said Vinomofo raised $10 million to launch in new global markets and to fund a brand marketing campaign and that what appears to be a $4.7 million loss was a planned spend.
“We invested in the things we raised the money for…launching in New Zealand and Singapore and setting up our own warehouse [in Melbourne] and got back to profitability,” he said, noting that Vinomofo is profitable today.
Eikmeier added that the reporting will not impact Vinomofo’s strategic shift to focus on long-term growth.
“We don’t get stressed by that. It’s important to set the record straight, but it’s alarmist report. [Glaucus] are just doing it to knock down Blue Sky’s share price,” he said.
“We’re happy with the direction revenue and profit margin are headed,” he added.
Vinomofo will be celebrating its seventh year in business on Thursday by offering customers special discounts on wine, sharing videos of the co-founders on social media and holding a celebratory event with staff.