The success of GroupOn has sprouted more than 20 group buying sites in Australia, all hoping to have the same kind of impact.
Liquid Deals is one of these, but operates in a niche within a niche, offering nothing but quality wine discounted by up to 50%.
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Geoff Drucker, one of the five co-founders of Liquid Deals, spoke to StartupSmart about the journey of the business.
What inspired the idea for Liquid Deals?
I’ve been working with a colleague by the name of Pete Burley for quite some time. He’s got skills in database building and database management. My skills are in marketing.
In developing [another site], Pete and I watched the very rapid growth of group buying. We’d also been quite conscious of how popular purchasing wine was on the internet, with auction sites and a variety of other online sites where people can buy wine.
We thought, there’s got to be an opportunity to do something in group buying but to do it in a niche way. Then we thought, why not create a group buying site for wine and wine only?
What was the process from there?
To be able to sell alcohol, you’ve got to be able to have an alcohol license, which we didn’t have. But for many years, I’ve been friends with a guy by the name of Peter Marr and he has a business called Winestyle, which is about servicing private clients with their wine needs.
Peter Marr’s Winestyle has got a very big warehouse – we can manage trucks, we can manage the distribution through Australia Post.
I asked Peter if he would be interested in partnering with us – he has the license and we’ve got the idea – and he said yes.
He then had colleagues who are web developers so it sort of put together a nice package of skills in terms of marketing, database building and management, buying and acquiring wine, and people to build the website.
We had a very structured arrangement in terms of who was to do what, and everybody was to operate on a sweat-for-equity basis. This was about October last year.
We didn’t initially have to put any money into it although we have done that now. We all just worked and worked to do what we had to.
We had the site built, finished, done and dusted and our first offer out on December 17. We all worked like crazy to get the whole thing built and to secure the first deal of wine.
What sets Liquid Deals apart from its competitors?
It’s got to be quality wine so we put it through a tasting panel. We either get them together or we send the wine out to them. It’s a lot better for us to send the wine to them individually so that their comments aren’t influenced by other people.
So the wine is sent to them, they make an assessment of it, they send back a couple of paragraphs about what they think of it and give it a rating, we collate that and it becomes the text that goes with the website copy for the wine that’s on offer.
The other thing that we’re doing now is we’re actually going to sell our wine in half dozen lots rather than making people commit to a dozen bottles.
Was the tasting panel planned from the beginning?
It really was. What we didn’t want to do was to compete with the auction sites that are out there because it’s a bit hit-and-miss.
To be able to justify the fact that we are saying that we’re offering quality wine, it’s not good enough for us to assess it. It’s better for us to have independent people assessing the wine to say yes, this wine is something that I’d be happy to put my name behind.
How was that panel selected and how many people are currently on it?
The tasting panel at the moment has got six on it. We want to try and build that up to 12 so that we’ve got different people regularly.
Some of the people are people who Peter Marr has worked with for years who have either had media wine tasting roles or wine writing roles, or people in the hospitality industry who are highly regarded.