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Logistics & Fulfilment

Vinomofo opens pop-up in new Melbourne warehouse

Australian online wine retailer Vinomofo plans to capture sales beyond the delivery cutoff that hamstrings many e-retailers in the final days before Christmas with the launch of a pop-up shop in Port Melbourne this week.

The pop-up will run from 22-24 December. Vinomofo co-founder Andre Eikmeier says it will not only give customers an opportunity to buy cases and single bottles of wine right up to Christmas, but will also offer free tastings in a wine-bar-like atmosphere.

It’s all part of the retailer’s strategy to engage with customers beyond the online space, which can also be seen in its decision to ‘insource’ Australian distribution.

Vinomofo has recently leased a 5500sqm Port Melbourne warehouse where, in addition to conducting logistical operations, the company intends to host regular customer events, including this week’s pop-up.

“We chose Port Melbourne, rather than something further away [for this reason],” Eikmeier told Internet Retailing.

“We built a customer experience centre, so people can come in and taste and talk and have an experience with wine and with us. We always wanted that. Not to mention the ability to do click and collect,” he said.

Eikmeier expects all national distribution to occur at the Port Melbourne warehouse by February 2017. To make that happen, the online retailer has been working with a logistics consultancy to select everything from the location to the warehouse management system.

“It was the kind of thing where I thought let’s fast track our knowledge and get this right,” Eikmeier said.

Until recently, Vinomofo relied on a third-party logistics provider and a delivery provider to handle its distribution. But Eikmeier says the lack of visibility was frustrating, as well as the sense that no other company could provide the same level of customer service as his own team.

“The 3PL might be very good at what they do, but they will never be as good as it as you, because they’re never going to care as much as you,” Eikmeier said.

Eikmeier also said Vinomofo’s rapid growth made it the right time to bring logistics in-house.

“Whatever the capital investment was upfront, it will be made back reasonably quickly with the cost savings from operating at the scale we’re at. That was never a particular concern,” he said.

According to Eikmeier, Vinomofo will also employ its own group of drivers next year, who will initially make deliveries in Melbourne. This will enable the retailer to further extend its company culture and ethos to every customer touchpoint. “What we’ll be able to do with our own drivers is limitless,” Eikmeier said.

He went on to describe a scenario in which drivers would greet customers by name, ask how they liked their previous order, give them notes on the wine being delivered and even “offer to their bins in.”

“When you outsource logistics and delivery you just don’t have the same control over that,” he said.

Crucially, this will also give Vinomofo the flexibility to make deliveries after hours and on weekends, an option Eikmeier says is sorely lacking.

“People are less concerned with the speed as being able to choose where and when they have it delivered. I think the future of delivery is 2100 on a Tuesday night, 1100 on a Saturday.”

He concedes this might be easier said than done, as evidenced by the fact that few delivery providers currently operate during these times.

But Eikmeier said that’s why the model is being tested on a small scale first in Melbourne. If it proves successful, Vinomofo may open warehouses in other cities around Australia.

“I don’t think it will be long before we’re opening up warehouses in other cities. This is what we’re so excited about,” he said.

Besides the advantages of in-house distribution, the Port Melbourne warehouse is also an opportunity for Vinomofo to experiment with bricks and mortar retailing.

“We’ve certainly entertained the concept of Vinomofo bricks and mortar stores in future. They’re not next year’s strategic objectives, but we can certainly see that in our future,” Eikmeier said.

If that were to occur, Eikmeier says he wouldn’t support separate pricing for online and offline purchases. And although the company is known for its heavily discounted wines, Eikmeier doesn’t see the low price point as a problem unique to bricks and mortar retail.

“It’s expensive running an online business. We have 130 staff, we’ve got a creative and marketing team of 15, we’ve got 80 people in the customer team, it’s a big operation. There are no cost savings to being online versus in store,” he said.

“I don’t think [a bricks and mortar store] is going to create a significant amount of margin loss. Like I said, it’s easy for me to say without having a store. I may learn other things.”

Since launching in a garage in Adelaide in 2011, Vinomofo has grown to almost 500,000 members in Australia and an annual turnover of $50 million in revenue.

In April of this year, online wine retailer secured a $25 million investment from Blue Sky Venture Capital to fund its international expansion in six new markets, including New Zealand and Singapore, where it launched earlier this year, and the US, where it plans to launch in June 2017.

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