The way in which consumers purchase wine is evolving quickly, and IWSR numbers now show that in 2018, ecommerce accounted for 3.6% of the total value of wine sales globally. One of those in pole position to capitalise on changing purchasing patterns in the wine trade is the world’s most widely downloaded wine app, Vivino. IWSR talks with Chris Tsakalakis, Ecommerce pioneer and CEO of wine app and marketplace Vivino.
Last year, Vivino appointed experienced ecommerce marketeer Chris Tsakalakis as their CEO. Tsakalakis was one of the early Ecommerce visionaries in the mid-nineties, where his belief in the possibilities of the internet led him to give up everything to move to what he calls the ‘epicentre’ of the internet revolution, San Francisco. He realised that the Internet could “make everything a lot more efficient, and make people’s lives a lot easier”. He thought it was too big an opportunity to ignore.
Tsakalakis has exhibited his experience and proficiency in the mechanics of ecommerce during his time at eBay and, more recently, with the online ticket seller StubHub; in the eight years under his stewardship, StubHub’s annual ticket sales went from $400 million to $3.2 billion.
Although shipping wine presents several challenges, Tsakalakis thinks that there is a large online wine market waiting to be developed. Tsakalakis suggests that the average US consumer attends eight sporting occasions annually, yet the average wine drinker drinks most weeks; that is at least fifty-two opportunities to sell to them each year.
According to Tsakalakis, wine is also very suited to the digital environment: “like books, movies and music, there are a vast amount of wines available to purchase and that is a lot of information for a consumer to digest”; the internet provides wine drinkers with the means to filter through a huge inventory of wines and better understand the amount of choice on offer.
The internet provides wine drinkers with the means to filter through a huge inventory of wines and better understand the amount of choice on offer.
An offline consumer, Tsakalakis explains, will typically have to pick the wine store to visit, get there, and will be limited to the selection of wines that the store has on its shelves. There may be a label that they like or a name they recognise, but other than the guidance a price might give on quality or suitability, there will be an element of guesswork even with the most insightful of sales assistants.
Tsakalakis contrasts this with Vivino, a vast marketplace with 10.7 million wines accessible from the smart phone in your pocket that is supported by 130 million independently sourced ratings and reviews, providing a seemingly infinite knowledge pool for confident decision making. In addition to this, the activities of the current 36 million users enables the app to personalise the experience for each and every one of them; optimised recommendations can then be put forward for wines that are best matched to a user’s tastes and price points.
The scanning facility provides the critical differential from other rival online wine retailers: it acts as a gateway for consumers to enter the app and provides the ongoing interaction to generate usage. As the number of users increases, so too do the ratings, reviews, scans and available intelligence.
Tsakalakis’ optimism would appear to be well founded, and, not surprisingly, he anticipates the shift in wine sales from bricks and mortar outlets to the online space to be at an early stage. According to Tsakalakis, ecommerce could capture as much as 20% of the total wine trade – in today’s market that equates to more than $40bn according to IWSR’S figures.
According to Tsakalakis, ecommerce could capture as much as 20% of the total wine trade – in today’s market that equates to more than $40bn according to IWSR’S figures.
He recognises that markets will develop at varying speeds and this is determined by the level of consumer digital engagement and the efficiency of the distribution delivery systems in place. The markets setting the pace with online sales are the ones with higher levels of digital literacy and with the infrastructure in place for rapid and safe dispatch.
Tsakalakis concedes that there are shipping challenges to fine tune because wine is packed in heavy and fragile packaging, but Vivino limits delivery distance by linking up with around 600 global merchants; these merchants synchronise their wine databases with Vivino’s and this localises the distribution. The merchants compete on price and this ensures that Vivino always provides good value.
Value is always attractive to consumers, but Tsakalakis feels that Vivino’s appeal is based on the fact that it is not just a marketplace for wine but also a reference point that gives wine lovers the confidence in choosing the right wine for them.
The number of Vivino users can be expected to continue to grow and the app’s long-term prospects remain very positive. The scale of its success will, however, hinge on its ability to convert its users into buyers. Chris Tsakalakis is more than confident that this will be achieved by an increasingly sophisticated personalisation process and by improving the ease of the buying experience that Vivino offers.