February 2001

Cert is probably the first logistics contractor to launch its own online wine e-tail site. Peter Rowlands finds out what else makes bringmywine.com unique

Around about now, the UK's latest initiative in online wine retailing should be going live. Check out the Web address of bringmywine.com; by the time you read this it could be up and running.

No great surprise there; but bringmywine.com is not like other online wine sites. It is almost certainly the only one set up by a major logistics group.

All becomes clear when you realise that Cert, the company behind it, is probably the UK's leading third-party logistics contractor in the drinks sector. Its client list includes many internationally famous names such as Allied Domecq, Freixenet, Krug, Moet & Chandon, Pol Roger, Seagram and Veuve Clicquot.

However, the real impetus for the Web initiative has come from a rather more specialist quarter. Cert has a fine wine storage and distribution subsidiary, Octavian, which works for a wide range of clients from producers to private individuals, and serves about 300 trade customers. It also has a unique asset at its disposal ­ an underground storage depot once occupied by the Ministry of Defence at Corsham in Wiltshire, which provides ideal conditions for keeping wine at constant temperature and humidity.

In all, Octavian holds stock worth an estimated £250 million at any one time. And while some of this stock may be turned as frequently as once a fortnight, at least one customer only turns its stock once a year. Michael Lainas, Cert's business development director (and also managing director of Octavian), comments ironically: "As a supply-chain model it's inherently sub-optimal."

As early as 1999, the company started wondering if some sort of online trading venture could exploit this resource more effectively. Originally it focused on the business-to-business sector, planning a consolidation service for deliveries by different customers to London hotels. This is still in the pipeline; but as Michael Lainas explains: "It was very complex to get all the stakeholders to become involved."

So the group turned instead to the consumer-direct B2C sector, where the opportunities seemed more promising. Growth in wine purchasing was running at around 7 per cent a year in the UK, and the mail order sector was growing at 3 per cent. It seemed an obvious market to attack.

The group felt its great strength was its ready access to existing stocks of wine. "It was an amazingly powerful opportunity," Michael Lainas says. "We knew a lot of pure-play wine retail sites would emerge as competitors, but very few of them would be able to start from our position."

To give some measure to that advantage, David Sones, Cert's e-commerce director, reckons that a typical wine Web site operator might stock around 300 lines. By contrast, Cert's bringmywine.com operation was aiming to start with 1,000 lines, but could theoretically draw on twenty times that number.

Michael Lainas admits it was necessary to persuade the stock owners to buy into the concept, but says most of them have been only too pleased to be offered a new channel to market. "We're not taking sales away from them, we're creating the chance for them to sell more."

The secret weapon that was felt to clinch Cert's advantage was the fact that it would not have to take title to the wine until an online order was placed. Since payment would be almost immediate, the group would never really own the wine, but in effect would simply be selling it on behalf of its original owners: genuinely a win-win situation.

However, Cert was not about to rush into anything, and clearly had no intention of treating Web retailing merely as a by-product of its logistics business. It set up a self-contained division, On-line Wine, to develop new e-commerce ventures, and put in motion an extensive market research programme. An external agency was commissioned to study Internet trends and consumer buying habits, and used a variety of techniques such as consumer focus groups to evaluate the likely demand.

The research essentially confirmed the group's belief in the wine retail project, but also made it clear that the service had to offer real value to consumers. "In the wine business, consumers need access not just to the product, but also to information," says David Sones.

The thrust of the Web site development has therefore been towards personalisation of information, and tailoring of the product offering to individual customers. "There are an awful lot of wine sites out there already," Sones admits, "but they're lacking in many respects. We've aimed to create a site whose unique selling points include personality, breadth and depth."

The product itself (the wine) was already in situ. The company had access to a varied mix of wines, which included plenty of affordable lines, but also many "rare gems" ­ products that would be hard (often impossible) to find anywhere else, and would seldom if ever be available directly from stock. Pricing was set at "the equivalent of the lowest normal retail price," in Michael Lainas's words.

Allied to the basic offering, Cert decided to build up a comprehensive online resource that would appeal to a well-defined target market ­ notably AB consumers in the 35 to 55 age range. Elements included, for instance, feature articles on fine wines, and an online catalogue of information on viniculture and related topics, which is being offered in the form of a searchable database. "There was nothing else quite like it available," Sones says.

A more subtle form of marketing has been the adoption of advanced systems for customer profiling and knowledge management. The key here has been software by Autonomy, which helps monitor buying trends and perform "contextual matching" to offer products appropriate to each buyer. It can perform tricks such as indicating whether a particular selection of wines in a mixed case will appeal to a given customer.

To consumers, the visual evidence of this capability is a kind of "online butler", provisionally called Vincent, who has been given a rudimentary personality on the Web site, and proposes purchases to customers based on their own previous buying patterns.

"We try to avoid throwing hundreds of wines at customers," Sones says, "and instead offer a catalogue based on personal preference." But he adds that with a few mouse clicks, consumers can easily still access the full range of wines on offer. And he points out that while wines are sold by the case, individual bottle-picking is part of the offer, so ultimately consumers are free to create mixed cases of their own choosing.

A measure of the group's commitment to the project is the fact that it has set up bringmywine.com as a separate, self-contained business unit with its own dedicated management, and external as well as internal shareholders. It has also recruited a specialist from the wine trade, Kim Tidy, as its wine manager. He has been able to help make judicious selections from the vast choice of potential lines, and build up a coherent range of offerings.

Other features of the Web site include the opportunity to drill down into product detail, and to perform advanced searches based on both wine type and price band. There is also a wine club called Entwined for frequent purchasers, offering discounts and even wine tastings. Future plans include wine auctions through the site.

Autonomy is just one of a range of developers who have contributed to the system. Interface design was done by Domino; catalogue management by AO International; and integration by Okana. There are also links to Cert's FWL warehouse management system and Cognos knowledge management. Other suppliers include e-share (customer service), ETL (database extraction), Strategix (financial management) and Worldpay (credit payments).

Integration has been given a high priority in the project. As David Sones puts it: "Any serious Web business has to be an end-to-end operation. The Web site is just the shop window. You've got to learn new skills ­ including some you didn't even know you needed. You've got to give care and attention to detail."

Michael Lainas admits that in spite of the advanced planning, systems integration "proved even more complex than we thought it would." But the company has refused to be deflected from getting this right, and in fact deferred a planned pre-Christmas launch in order to ensure that all systems were functioning correctly.

The service is available anywhere in the UK, and Michael Lainas sees further sales opportunities arising in future as international trade barriers are eased.

Currently final delivery is divided between Octavian's own van fleet, which is handling cases valued at more than £50, and a specialist carrier, Concord, which is doing the rest. "We've put some very tight service level agreements in place with the carriers," Michael Lainas says. "It's no good expecting appropriate service levels from a carrier doing a hundred and fifty drops a day."

He says it has proved difficult to find carriers willing to offer the kind of evening deliveries sought by many consumers. However, very fast delivery has not in fact been part of the proposition; the basic service provides for delivery within five days (although this is being bettered in practice), with some freedom for consumers to specify the delivery time. As Michael Lainas points out: "What people want most in terms of delivery is reliability."

Branding has been given a high priority. Lainas admits that by the time the project had been given the go-ahead, most of the obvious names for wine Web sites had already been taken up by rivals. But the group is clearly pleased with the name "bringmywine", which is felt to combine a sense of movement with a range of other, more subtle cultural references.

Cert is well aware that promotion will be essential to the success of the venture. "But we're not going to blast millions on advertising," David Sones emphasises. Michael Lainas adds that promotion will not be limited to online initiatives. Instead, judicious spending is likely in both mainstream and specialist media.

Physical management of the operation is divided among various locations. The business is based in premises adjacent to the underground warehouse at Corsham, but some functions are based at the group headquarters in Hoddesden, Hertfordshire.

The company is believed to have invested around £3 million in setting up the operation, but even so, Michael Lainas accepts that success will be no easy ride. "Even with a stockless model, we'll have to wait until the beginning of year three to start making profits, so it's hard to see how some of the other contenders can do it at all."

Of all the wine e-tail sites that have emerged in the past year or so, bringmywine.com certainly seems among the best placed to succeed. It has a range of resources and expertise most rivals would find hard to match ­ not least in the fields of fulfilment and final delivery, which have proved so troublesome to other dot-coms. It also has backing and commitment behind it. "Success is not inevitable in this kind of operation," Michael Lainas says, "but we believe we can make it work, or we wouldn't be doing it."

Cert Group ­ drinks distribution, and much more, Cert Group provides dedicated and multi-user warehousing and distribution nationwide, with a particular focus on the drinks industry. Subsidiary businesses include Cert Distributors, a van sales operation built round a fleet acquired from Energiser; Cert Promotions, providing promotional design and packaging services; and Cert E-Commerce, providing a range of e-business services. Octavian, a long-standing subsidiary, stores and delivers fine wine. The group was founded in 1986, and remains independent.