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From the source: Tom Walenkamp, Good Pair Days

Wine subscription retailer Good Pair Days is all about recommending the perfect drop to customers and helping them discover new bottles to enjoy to suit their palates. Co-founder Tom Walenkamp discusses why customers are now buying more wine in the face of coronavirus and how this is changing the traditional retail experience.

Inside Retail Weekly: How would you describe the past month for Good Pair Days?

Tom Walenkamp: It’s been the craziest month. There’s a lot of sad news in the world at the moment. It’s a strange feeling because our business has been performing really well over the last couple of weeks. It’s a mixed feeling right now. We’re really thankful that our business is going well so far and we’ve been able to keep everyone employed. We’ve employed new people who have recently lost their jobs, which has been a good feeling from that perspective; but at the same time, we’re cautious about what the future holds and coronavirus’s effect on the economy, unemployment and even short-term things, like whether we can keep operating.

IRW: What has the impact been like on the business internally?

TW: We moved early in terms of getting everyone to work from home. We’re a very distributed team with co-founders Banjo [Harris Plane] being down in Adelaide and Alberto [de Castro Moreira], who lives in Brazil for one or two months a year, so we’re used to working from locations all over the world.  

The other aspect is making sure our operations are still going in terms of warehousing and logistics and that everyone is able to keep working in as safe an environment as possible. We put a continuity plan together a couple weeks ago, which split the teams based on their responsibilities, so we have three different teams operating the warehouse independently. They’re all separate, so those teams can step in at any time and function the warehouse fully. There’s a bit more cost to running a business like that, but we thought it would be the best thing to do for continuity. We’ve also put in all the other safety procedures in place for staff – social distancing, hand washing and monitoring staff health if they don’t feel well.  

The biggest consequence is that our sales have increased dramatically, so we split the teams and reduced their ability to operate in the warehouse. Our new orders and subscriptions have started to really double and triple over the last few weeks.

IRW: What do you think that says about where people are at right now in the world?

TW: People are spending a lot more time at home and a glass of wine does make it more bearable, I’m not going to pretend otherwise. Before, most people went out once or twice to bars and restaurants and would have a couple of glasses of wine, so they’re not drinking more, but all the drinking they were doing outside of home has moved inside. Obviously, we want to make sure everyone’s drinking responsibly, but I don’t see any indication of otherwise from our member base.

Then again, our member base has subscribed to a business that writes about tasting notes, stories about the makers, recipe matches and food and wine pairings, so our members aren’t the ones who would necessarily go crazy, I guess.

IRW: Would you say that being a subscription business would help with cashflow and forecasting sales?

TW: Customers don’t pay for subscriptions up front, they pay them month by month. You do have a lot more clarity over your upcoming sales, for sure. There are probably fewer spikes.

It does provide you with more clarity around your future stock needs, so supply risk is quite a bit lower. You’re less likely to be left with stock that you don’t need. We’re bringing in stock to fill a demand that we already know; we’re not bringing in stock and trying to generate demand. It’s a nice business model.

The flip side is that it’s harder for us to get subscribers and one-off purchases. Even though there’s no lock-in commitment and we don’t make it hard to get out of, some people just don’t like subscriptions because they don’t trust themselves to remember to pause or skip a month. There’s an educational and explanation process upfront.

IRW: Tell me about how you came up with the idea to launch Good Pair Days.

TW: I was in finance previously. I needed to get out of that world and I decided to do my MBA in France. I still loved the world of business, but I just didn’t know what I wanted to do next.

 I was doing great case studies on new innovative businesses and successful models and inspirational leaders, while at the same time, eating a lot of cheese and wine with my European classmates. I really thought wine was where I wanted to go. As a customer, I really enjoyed wine but I really hated the retail experience, so I built the business to scratch my own itch. I liked drinking wine, I liked picking it in a restaurant, I enjoyed when people explained it to me, but when’d I go into a bottle shop and look at the thousands of bottles on the shelf, I wouldn’t know where to begin, and even afterwards, I wasn’t sure if I wasn’t good enough or if the bottle wasn’t. It was a game of wine anxiety and roulette – and I just thought there must be a better way to solve this problem for what I suspected was a big portion of the market who like wine, but don’t enjoy buying it.

My European classmates were so much more at ease with wine in a non-pretentious manner that I was inspired to create an experience that would open up the world of wine to them.

IRW: How long ago did you launch Good Pair Days?

TW: When we first launched in 2005, it was just an e-commerce store and the aim was to make learning and wine discovery easier, but we took the wrong approach. We made it a convoluted decision process to add a single bottle to cart – we’d ask people, what food are you eating? What’s your mood? Then we’d recommend two bottles and the customer had to choose one from there. It wasn’t solving the customer’s problem of making buying and learning about wine any easier.

We are big proponents of build, measure and learn. We launched it quickly, built it ourselves and did it as a lean startup, then we talked to customers and got a lot of feedback. They said they loved doing it the first time, but after that, it just became too difficult. They said, ‘Now you know my taste and I trust your judgment, can’t you just send me wine every month that I like and I can give you feedback and you can learn more about me?’

I loved it as a business model, we thought subscription would be more difficult but we got that feedback so often, we just thought it was the right approach.

We relaunched the business after six months at the beginning of 2016 as a personalised subscription service, where we had a palate quiz at the front, the questions aren’t necessarily related to wine, but we can gauge someone’s taste e-profile and recommend them the first bottles, then learn more about them over time as they rate those bottles and interact with the site.

When we relaunched, it was like night and day. All of a sudden, members and customers understood the value of what we were doing and it was so easy to communicate what we do and what we’re about. We started to get customers through social media and word-of-mouth a lot more easily. It started rolling from there.

IRW: What’s the past year been like for Good Pair Days?

TW: We rebranded less than a year ago to Good Pair Days; we were the Wine Gallery before that, but it didn’t speak to our mission and ethos and we needed a new name and identity. It was a big decision to go down that path. As part of that process, all the things we built in the background, we launched at the same time – new price points, an app, we changed our recommendation engine from algorithm-based tech to full machine-learning tech. We created the Taste Test Challenge, where a customer can get on the app and every wine we send them, they can do a taste testing and it shows them how accurately they can judge the wine characteristics. We launched the badges and rewards system, where customers can get rewarded for stepping outside of their comfort zone and earn points to redeem for corkscrews and wine holders.  

On the product side, we redesigned the whole packaging to make sure we can remove plastic completely. We worked with a design firm to come up with a sugarcane byproduct that’s compostable and biodegradable and replaced all the internal packaging of the box.

IRW: How would you describe the booze industry right now?

TW: There’s innovation happening now in terms of product – distilleries like Four Pines and Archie Rose have pivoted from gin to hand sanitiser. I think you’re seeing so many more boutique players having a lot of success in launching great new products. In the online space, the innovation was slow to start, but now it’s starting to ramp up. With internet 1.0 and 2.0, it was copying and pasting what a bottle shop is in the physical space and just moving it online. No-one thought, ‘We’ve got new tools that we can use to start creating a different customer experience for alcohol buyers.’

There are now more immediate delivery services which have sprung up, too.

Tech is helping us to provide a lot more education and depth into what people are consuming. You can only fit so much info onto the back of a wine label, but having it on our site, you can have recipe pairings, stories behind the makers, maps around the geography, and all the technical data for people who want to dive into that. I think online really provides a great opportunity to provide that depth of experience for the customer.

IRW: How would you describe the modern alcohol consumer?

TW: Our customer base is quite young compared to the rest of the market. The average age is around 30. We’re definitely finding that our customers are consuming less, but they’re more considered in what they’re drinking. We still find most of them still like traditional methods of production of wine, but they want to experiment with natural and low-alcohol wines as part of that.  

More people are asking for things like vegan wines – it’s a low percentage but it’s definitely increasing. I think low-alcohol will be interesting from a health perspective. People want to drink alcohol from a social habit perspective, but we’re finding people don’t want to get drunk or hungover the next day. They want to have good conversation, interact with friends; they don’t want to write themselves off anymore. That’s been core to our product. Our main product is three bottles of wine a month, it’s not really about buying a dozen and getting through them in a month. It’s three bottles of discoverability and wine you can share with friends.

IRW: What plans do you have for the year ahead?

TW: We had a lot of plans for the year, but they’ll probably have to shift slightly. We were going to experiment a lot more with activations and pop-up stores. We are an online retailer, but we think there’s room for innovation in face-to-face retail.  

We want to double down on the education and learning elements of what we do. We did a huge customer survey after the big changes settled down. Customers like us for two big reasons. One, they get to discover wines they wouldn’t have tried themselves and we help them step outside their comfort zone. Then, they get to learn more about wine as they go.  

So, taking those things into consideration, we’re planning to launch a more interactive and comprehensive educational element of our online product – guides and wine knowledge that you can link to your journey as a customer. We want to integrate it into our badges and rewards system as well as our customers’ month-to-month delivery in a non-snooty or pretentious manner. You can learn as much or as little as you like on your wine journey.

IRW: I think most people would agree that the world of wine can be pretty intimidating, but I have a feeling that it’s changing.

TW: I wasn’t from the wine industry. When I started it, I had a competitive advantage in understanding consumers like me. I brought on Banjo and Alberto – Banjo is a wine expert, and Alberto is a great tech expert. I was the one trying to get the product right for the consumer.

The first question you’re often asked at a cellar door is: ‘Would you like a dry one?’ People often say yes or no based on what someone else has said, but it’s not an intuitive term at all. So, I used to pretend that I knew what it meant for a long time. What’s the opposite of dry, isn’t that wet?

When you’re in your 20s, nobody wants to put their hand up and say, ‘Wait a second, I don’t get it. Wine’s wet.’ That’s the most basic term that the wine industry uses and just assumes everyone knows.

I think the industry is starting to wake up and see it’s not helpful for the portion of the market that doesn’t know what it means and isn’t putting their hand up.

This story first ran in Inside Retail Weekly. Given the current crisis, we have decided to unlock all premium content related to COVID-19. If you would like to support Inside Retail, please consider subscribing here.

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