Could this emerging ASX stock become the Uber of wine delivery?
Food & Agriculture
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Special report: Dawine’s new boss Dean Taylor has a vision to make home wine deliveries as quick, easy and cheap as Uber Eats.
Dawine (ASX:DW8) is building an integrated trading and logistics platform called Wine Depot that will enable wine producers and retailers to facilitate, pack and deliver customer orders from strategically placed depots.
The idea is that customers located in major centres will be able to order a bottle from their favourite retailer and have it delivered in the same timeframe you’d expect a delivery meal to arrive by on-demand delivery companies.
To get there, Mr Taylor’s drawing from 20 years of experience in wine storage logistics and retailing and kicking off what will be his eighth and largest start-up within the wine sector.
“The technology platform we are building is a very large and complex project in itself – designed to allow hundreds of disparate ecommerce, ERP and warehouse management systems to talk to each other,” he told Stockhead.
Supporting the technology platform will be a network of ‘depots’, each capable of storing between 20,000 and 25,000 different wines, ready to be picked and packed by the bottle.
“The sheer scale of those sites and the infrastructure supporting the network is going to require substantial investment not to mention some sophisticated supply chain management. Over time the network of depots will be expanded into other key markets for Australian wine such as China, USA, UK and New Zealand.”
Born of necessity
Mr Taylor’s concept for Wine Depot was born almost 20 years ago while establishing his first business Wine Ark – which provided off-site climate-controlled wine storage for private collectors.
“Right from day one, we were inundated with requests from small wineries looking for someone to provide them with a storage and logistics service for their Sydney based clients.”
“Even back then they realised how much time and money they could save in freight by shipping their orders locally.”
This unexpected latent demand in the market helped him fill his first two storage sites in less than two years, both three years ahead of schedule.
By the time he fully exited Wine Ark in late 2009, Mr Taylor had 11 storage sites under his control around the country, all connected via an online marketplace allowing the $100 million worth of wine under his management to be traded like stocks and shares.
Not bad for a company started with just $1.5 million working capital.
Recognising the potential of the ecommerce to disrupt traditional retail, Mr Taylor went on launch Cracka Wines & My Wine Guy – online marketplaces designed to allow wineries to bypass the supermarkets and sell directly to consumers.
The business got off to a flying start and was quickly ranked within the top 50 online retailers in Australia.
But with over 1,000 wineries represented on their websites, Mr Taylor soon discovered the strength of the marketplace model was also its biggest weakness – relying on wineries located all over the country to fulfil his customer’s orders.
“It was absolutely frustrating. While no fault of our own, the sheer time taken to fulfil our orders had a significant impact on our customer service and satisfaction ratings. As the holder of the customer relationship, we had no choice but to wear the blame for any issues, and often this came at significant cost to the business.”
“In the end, we had no other choice but to carry the majority of our stock lines and manage logistics ourselves, which removed a great deal of the efficiency that we set out to create. Like the traditional retailers that we set out to disrupt, we soon held millions of dollars in inventory, something that we never really planned or budgeted to do.”
Tech to the rescue
Mr Taylor realised that the solution to the problem he and most online retailers faced was exactly the same as what he’d provided for wineries many years before at Wine Ark – using local inventory reserves used to fulfil local orders.
The main difference was that now he could harness sophisticated technology to seamlessly connect all the participants within the supply chain at an electronics level.
“Twenty years ago, the integration tools needed to do this simply didn’t exist or required hardware and software that the largest retail conglomerates could afford. Cloud computing has changed all of that and it’s my vision to use that technology to connect and digitally transform how global wine supply chain functions.”
While his solution is fairly simple, the problem is that for it to work it requires volume and scale.
For that reason Taylor insists that the Wine Depot model will need to remain agnostic – providing a solution that services traditional, online, direct-to-consumer and the emerging on demand sales channels such as Jimmy Brings, Tipple, Quickbottle, Hellodrinks and Klink.
This special report is brought to you by Dawine.
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