It’s time to think outside the boxes

If you visited Paul Pavli’s shop in Chobham during Covid you would have struggled to get near the shelves. The place was choked with towers of cardboard as hundreds of daily deliveries awaited collection.

Online sales still dominate the business, but these days the plan also involves getting the premises to realise its potential as a shop in its own right –and an occasional restaurant in the evenings.

Chobham is, apparently, “occasionally known as the Beverly Hills of the UK”, according to aboutbritain.com, which makes it seem like an ideal location for a wine shop.

Peter Gabriel was born here; Paul Weller comes from Woking, a 12-minute drive away. Neither musician was in evidence when The Wine Merchant rocked up in the Surrey village in March. But the person we were looking to interview was a different sort of personality altogether.

Paul Pavli was born into a wine family. His father Mario owned and ran Bacchus et al in Guildford until his retirement, while his uncle, Andrew, is the force behind Wimbledon Wine Cellar.

For a while, Paul helped to run his dad’s business, setting up his own online wine shop based in an annexe at his parent’s home. As it grew, he decided to branch out into bricks and mortar too, and identified a spacious unit in the centre of Chobham, a pretty and conspicuously affluent community where he lives with his wife and young children.

Online sales still dominate the mix, but the crazy months of lockdown, when most of the floor space was taken up with towers of boxes waiting to be shipped, are fading from memory as the small team focuses on increasing footfall and bringing back evening events. The central display units are on castors, and can be rolled out of the way to allow seating for about 30.

Has wine always been in your blood?

I used to take the mick out my dad knowing so much about wine when I was a teenager. It used to be an ongoing joke at dinner parties: oh, look at the wine snobs talking about their wine. Then it kind of fell into my lap after I finished college, needing a job. It made sense to go and work for my dad. From there I worked for my uncle for a little bit in Wimbledon.

By Graham Holter

When did you realise it was a vocation?

When I was forced on my own, because then I became a business, using my own money. That’s when I realised actually I had to get involved and I had to start loving it. I’d always loved sampling the wine, enjoying it, taking tours around vineyards and doing what everyone expects someone that has a wine business to do. But it took it to a whole new level when I started realising it was my livelihood.

We are a lifestyle industry, and if you’re not too careful you could spend 360 days of the year trying wine and actually not selling any.

Is your dad fully retired now?

Yeah. He comes in for a coffee and a chat. He spends most of his time abroad. But he kicks around, loves to show his face and likes to have his own input. He’s always pestering me to start bringing wine in from Cyprus. Some of it is starting to taste really good.

How have you developed the online side of the business over the years?

From 2017 we expanded a little bit on the website; spent a bit of money on building that. My key objective was to make sure that we had a lot of product available in stock. In 2019 we started selling a lot through the Amazon platform.

Then Covid hit, and it just sort of turned into a machine. I think at one point we were shipping 3,000 parcels a month all over the UK. Thank Christ suppliers were supplying us to that volume. And it carried on throughout 2020, 2021, 2022. We’re starting now to see the tail end of all of that and it’s resetting back to where it was in 2019.

What percentage of your revenue comes from online sales?

It’s a 70-30 split in favour of online.

Why did you feel you needed a bricks-andmortar shop?

I worked out that if I could find a shop locally, and get the rent at the right price, the cost of the shop versus our turnover and profitability is no different than an office would be anywhere. It makes more sense to me to have a shop than have an office.

Talk us through how you work with Amazon. You have two options. You can ship to their FBA [fulfilled by Amazon] centre. Risky; they can lose stock very quickly; there’s the cost of shipping it as well. But the upside to that business is that you get the instant Amazon FBA cycle. You’re on Prime: boom, done next day, Amazon pick, pack and deliver it. You haven’t got to worry about it.

If you have a merchant [account], it’s different. It’s coming out of your stock. Amazon will side with any of their customers if they don’t receive the parcel or it’s received damaged; if it’s delayed by a day. They’ll retract that sale from you immediately. And you don’t get the money for it, even if the customer’s received it a week later.

During Covid, it was a bit different. Everyone was forced to be at home and there was no reason to go out. Also Amazon were more than aware that the distribution network was highly stressed. So they relaxed those rules.

Now it’s changed a little bit. They want you to be putting your product into their FBA centres, rather than you fulfilling it yourself.

There is a lot of damage by couriers, which costs a lot of money. They don’t guarantee delivery on time, because of the way the network is.

If I was to sell a bottle of Sassicaia, I can make a good bit of profit. You can subsidise the loss if it gets damaged, if that makes any sense. However, on a bottle of Villa Maria, it’s too competitive: say eight, nine or 10 quid a bottle, or whatever it is. But it’s costing you seven, and if it gets lost and damaged, you’re lucky to break even. With Sassicaia there’s more room there in terms of profitability. If it does get damaged, if it does come back to you, you’re not losing quite so much.

Amazon has also started to take more control of what sellers were once selling. They’re approaching the supplier now to sell it themselves. So they would go straight to Hatch Mansfield for their Villa, their Taittinger, sell it under Amazon Direct. And you can’t compete, because effectively you’re competing with your supplier.

What’s your long-term position with Amazon?

It’s changing. We’ve had to sort of look at it from a holistic point of view. If there’s a customer that’s hot to buy, they’ll buy on Amazon. Outside of that, we’ve gone from turning over £30,000-£40,000 a month on Amazon to £10,000, because we can’t control what they’re going to do as our partners. There’s a lot of customers out there that will claim they’ve not received the parcel when they have received it and they get their money back, which is automated by Amazon.

Does that mean you’ll put more emphasis on your own website?

Oh yeah. We’ve massively increased the emphasis on our own website. We’ve added huge sell factors to try and increase volume through it. We’ve even started using Vivino as a platform, which has been fantastic. They approached us to ask if we wanted to be on there. Those notifications come through, you send out the wine on four-day shipping terms. The customer receives it. And that’s it. They have their own customer support centre, dedicated to you. So if there’s a problem, you speak to the same customer service manager, and they deal with it.

Are there any good couriers, or are some just less awful than others?

We started off with APC. Good service. As we grew, and we were shipping more, it became more apparent that we were spending far too much on couriers.

We then got approached by DHL, who were cheaper, but we had a huge problem with them; they lost a lot of parcels. Unexplained things. When it came to queries and bills, they were a nightmare, and they would never credit us.

So then we got approached by DPD and for four years they were our couriers, and they were very good to begin with and very good throughout Covid. Then early last year, their service became stretched, massively. Parcels kept getting lost, kept getting damaged. Their prices went up by 10p-15p a parcel, which is fine if the service is still the same, but when the service is getting worse, it’s not acceptable.

Then we moved to InXpress, who basically work alongside DHL. And that’s been a bit of a nightmare. And now we’re back to APC again. So I’ve been round every courier under the sun, and the gravity of the problem is that they are all as bad as each other.

The most common problem is that none of them get their invoices correct.

All of our negative reviews are related to nondelivery. And non-deliveries aren’t because we haven’t sent wine out. It’s because it’s never got there because the delivery company have failed.

I’ve been saying it for years: if someone came up with a dedicated courier service in the wine industry, it would do very well.

People shop in independents because they like the personality of the owner, the personal service, the ambience. The question is how you can replicate those things on a website. You can’t. Those people that shop online aren’t shopping for experience. Anyone that shops online I’m 99% certain is price-driven.

It’s not review-driven. How many people go onto a website and actually see what the reviews are before they purchase – 10%, maybe, if that. It’s all about whether or not that seller has that product. If they have it, they’ll buy it, but they won’t want to get ripped off for it.

So you’re saying these people already know what they want. They’re not browsing. They’re not browsing, no. The only time they’ll be browsing is if, say, I’ve got a bottle of Taittinger Comtes 2005. They know I’ve got it, they’ve gone to my website, they see there’s a discount: six bottles or more at 15%. Then they might start browsing and they might add more to the cart. But I personally believe that people come onto your platform because you have something specific that they’re after.

Does that mean there’s no point trying to inject personality with things like a blog, wine reviews or reports of trips?

I think they would be interesting, to a point. But there’s a lot of time that gets eaten up in doing reviews and blogs. It becomes a different kind of business model.

Where are consumers getting their information about wine, then?

Restaurants, I think. If you’re going out for dinner, the sommelier will have fairly in-depth knowledge about the wine. And those people that enjoy fine wine will store that in their brain and they remember it and they take photos. Do you know how many people come into our shop and say, “have you got this wine? I had it at a restaurant the other day and it was fantastic”.

What trends are you seeing with the wines people are buying in the shop?

There’s no doubt that in this part of Surrey people are old-world wine lovers. Our market is definitely going up towards the higher end. People are buying for their wine fridges and sometimes to hold on

The to for five years before they drink it.

Some of our customers know more about the wine than I do. It’s actually quite refreshing to learn from a huge enthusiast.

We have a good support network of clients locally, which is the core of the business, no doubt about it. One thing Covid did was draw more people locally to us. I’ll get WhatsApps from customers all the time, which I would never get before. “How are you, can I pop in to see you?”

We had a dinner on Saturday, for 12 people, with five top-end Italian wines. It was a huge success. And that’s an experience I can offer with a shop that I wouldn’t be able to do in an office.

How do the dinners work?

A caterer comes in and cooks in the kitchen. She does the prep off-site. Pre-Covid, we used to do them once a month and they were really successful. We charged £110 a ticket and for that they got five courses of food. I think we went through eight or nine bottles of wine on Saturday night.

How many suppliers are you working with?

About 10, off the top of my head. Some suppliers are good; some aren’t. Some want to be on your shelves; some really aren’t that bothered. What I’ve found is that if you’re dealing with someone higher up in the company, that helps. Some people that are just the assistant salesman or whatever, they just come in, float about and off they go.

We’re looked after well by Hatch, Armit, Liberty, New Generation. Hatch are probably our largest supplier.

People around here have clearly got a bit of money. But are they quite price savvy?

Everyone’s always looking for a deal. Even on one bottle. I’d say we are actually one of the cheaper retailers in the market, but there’s always going to be someone who’s cheaper.

We’re working on margins between 25% and 30%. It doesn’t change online. Our prices are the same as our shop prices. We don’t differ – there’s too much admin doing that.

Our delivery is £6.99 for a case and there’s free delivery on orders over £100.

Do you do any wholesaling?

No. Not interested. I’ve had fingers burnt. To be honest with you, I just can’t be bothered with the aggro. Small margins as well.

How is your Fine Wine Bottle Club doing?

Really well. We’ve got lots of members. It’s £30 a month. It’s a lucky dip: you could get a £100 wine if we can get the right supply. We subsidise it using a median value over six months, depending on what we can get subsidised from suppliers as well.

Every single one of our members will normally buy a case of that wine that they’ve had, because they’ve enjoyed it. So it’s a great way of upselling.

Then there’s your Monthly Taste Journey cases. Exactly. You set the budget and you tell us how often you want it; tell us what you like and don’t like. It’s all set up online and automated and delivered. I’ve got customers that will email me saying, “I didn’t like that wine, can you make sure it’s not in our box for next month?”

On the opposite side, you’ll get customers that say, “I love that wine, can you add three more to my box for next month?”.

Costs are rising from all sides at the moment. How are you dealing with these increases? Duty’s going up; there are murmurs across the industry that there are gonna be price hikes. The price of Champagne is going up next month across the board. You’ve just got to work it out.

We had a session earlier in the year where we put everything up by about 7% and I’ve not had one of those sessions for two years. It was the first time that I’ve put it up by such a difference. But it had to be done.

Will some supermarket shoppers gravitate to indies because the price jump for those wines is proportionately higher?

The reality of it is that someone who’s going to the supermarket to buy wine is 85% likely to come to you as an independent only if you have something specific, or it’s a gift.

Have all the customers who discovered the shop during Covid gone back to the supermarkets?

Most of them have, yeah. We’re talking people that are in £1m and £2m houses that would usually buy from Waitrose. But Waitrose were only delivering one bottle at a time. So they’d ring us up and go, “can I get six bottles of Whispering Angel delivered?”. And you do it for about a year, 20 times. But as soon as things change, you’re forgotten about.

Some people just seem to prefer supermarkets. Is there something inherently frightening about wine shops?

The first thing we get with someone we haven’t seen before is, “wow, I didn’t realise you sold wine that cheap”. But that’s our core.

I guess it’s like going into a Michelin-star restaurant; the same sort of feeling of “I shouldn’t be here because I don’t really know what I’m doing”. But people can come in here and have a coffee, have a chat. You’re talking to like-minded people that have no air of snobbery or anything like that. A lot of people think wine is a posh product.

It’s all about the relaxed atmosphere. I want you to be able to tell me that you go to the supermarket to buy wine – don’t be ashamed of it. We are here to improve your palate and show that, by spending a couple of pounds more, it makes a big difference.

What do you want to do next with the business?

We’re holding firm where we are at the moment. We’re trying to get the events back up and running, and trying to get people back wandering into the shop. That fell away massively. We’re trying to get that vibe back.

I’m trying to get back to having the business running as a shop, as well as an online place of work. We have a fulfilment centre down the road now that packs and ships our stuff. We’re paying a small premium for that but it means that people can actually enjoy wandering into a wine shop rather than a shop full of boxes.

With wine, do you still feel like an explorer when it comes to sourcing?

Oh, forever. You’re always looking for the next thing.

It’s a lifestyle. And if you can make it your business then you’ve done well in life.

You need to be happy in what you’re doing. We forget, sometimes. In business, everyone goes through trials and tribulations. But at the end of the day, we get to sit there with a decent glass of wine.