Online Retail | An interview with Steve Rider, CEO and Founder, Mybottleshop.com

Steven Rider CPA, Founder and CEO

Mybottleshop.com.au

MOTTO IS “DRINK BETTER, EXPERIENCE MORE…”

Tell us about the start of mybottleshop. com and its journey to the number one independent online liquor retailer.

Mybottleshop.com has been trading five years now. I am a Certified Practising Accounting with a background in ecommerce. In fact, I ran a successful software company for 15 years before starting mybottleshop.com. Like most people, I am a bit of a collector and I found myself fitting out my corporate office with collectable bourbons, rare whisky and fine wine. When I sold the software company, I needed a job (laughing) and mybottleshop.com was born.

How has the digital revolution changed retailing?

Think about this. Not even 10 years ago your average liquor store was lucky to have 200 brands on the shelf and 80% of those products were wine. There was no craft beer and the craft spirits revolution was just a glint in the eyes of industry pioneers. Then bang! Five years ago, just as mybottleshop. com started, the industry exploded. New craft spirits, beers and wines were being released faster than we could create the products for the web site. We are adding 1500 products to mybottleshop.com every year. Now we have over 8000 products listed online. Compare that to your local liquor store that now may have 300 lines instead of 200. Of course space is limited right? If you have an 80 square metre shop – how many products can you realistically fit in there?

Do you have the stats? What is the proportion of liquor consumers shopping online, and is that growing?

Our stats seem to indicate that only about 6% of customers are buying liquor online BUT and it’s a big but, it’s changing very rapidly. Online retail in general is growing about 15% per annum (*according to IBIS World), but I think in liquor retail this is closer to 25%, admittedly off a smaller base. The key to growth online is convenience and that means improvements around logistics to do with delivering customers their liquor products more quickly. For example, we have been trialing one hour liquor delivery in Sydney. But it’s not easy. Australia is a big country and we have terrible roads and traffic congestion. Once fast urban delivery is properly solved, the local liquor store without parking is doomed.

What strategies do you need in place to be a successful online liquor retailer?

Managing costs and margins is critical, we need another 15% margin to be profitable compared to bricks and mortar stores. Search engine optimization is the lifeblood of online retail. If you don’t rank on Google, you don’t exist in the eyes of customers trying to find your bottles. You must be prepared to engage every day in social media especially Facebook, Twitter and Instagram, but also you have to generates lots of original content e.g. blog posts. And don’t forget YouTube – it’s the new way to do tasting reviews for drinks. At first its very hard to build an audience, but you have to persevere and just keep at it. Eventually your audience will build up. Same for the database. You have to have a database of customers you can send emails to on a weekly, even daily, basis.

Is it important to have a USP with online to differentiate from others in the same space?

If you don’t have a USP, you are just in a race to the bottom on price. And eventually only the industry giants will win that race, so 100% that’s true. Our USP is that we have the largest independent range of products in Australia, and you won’t find most of our products in your local bottle shop.

You have been quite creative with what you offer on your site – tell us about some of the more innovative services you offer and why this is important?

All online retailing is competitive and liquor is no different. And there are more entrants every week. So to stand out in the crowd, you have to work hard. At mybottleshop. com we have created a stockless model which sound unbelievable I know. But it’s true. We use the power of the internet

and our technology platform to drop ship products directly from our suppliers to our customers. We call this the Mybottleshop. com Liquor Link where we connect producers, distributor and customers. For products not on the Liquor Link, we electronically order products from our suppliers “just in time”. This will mean customers wait a little longer to receive their order, but the other differentiator for us is that they are “drinks worth waiting for”. Most of our products are fascinating and exciting and different, but they are not convenience products. For those products, you’ll visit your local bottle shop.

You had plans to list mybottleshop.com on the ASX, is this still the plan for the future and how will that impact the business?

We changed our tune when the new crowd funding legislation came in last year. Crowd funding is much better suited to our funding requirements rather than an ASX listing because customers are engaged as stakeholders. We are cleaning our balance sheet so we are fully financially fit ready to engage shareholders and investors.

Finally, in your opinion should bricks and mortar feel threatened by the digital onslaught in terms of share of sales or will it still hold a place in the future of liquor retail?

Convenience will always be the biggest factor that influences liquor purchasing. This means there is always a place for the bottle shop close by. The biggest threat in the industry remains the dominance of Woolworth’s Endeavour Drink Group. They have a powerful two prong arsenal. Dan Murphy online and mega stores and BWS convenience stores. That’s hard to beat and it’s a situation unique to Australia in the liquor-retailing world.

And can I say this... running an online liquor-retailing platform is expensive. It’s not like a shop where you place products on the shelf and the customer comes and serves themselves. No, we have to pack parcels, answer phones, run live-chat customer support. We still have rent and space except larger and more expensive. We also have all the IT overheads that traditional liquor retail doesn’t like servers, software costs, backup and support. Plus we have photographers, digital marketers, email specialists, social media experts. The costs are phenomenal. So if anything prices online should be higher than bricks and mortar or the margin will be smaller which means more volume is required. And that’s not always possible competing against supermarkets like Coles and Woolworths. So I am not going to sugar coat the fact that digital retailing is challenging.