In the midst of closing an $800,000 funding round Stephen Mobbs, co-founder of online wine marketplace Winery Lane, says the startup is currently seeing a “hockey stick” of sales growth.
“A lot of that has been driven by word-of-mouth. We don’t drive sales through promotions, and we’re not in a race to the bottom on price,” Mobbs told StartupSmart.
“We’re just trying to bring customers new and interesting wines.”
Founded two years ago and operating since June 2016, Winery Lane was born from Mobbs and his co-founder Cameron Harris’ deep love for wine, and deeper experience in the liquor industry. The two met whilst working for Schweppes in 2013, and have held positions working with companies such as Asahi and Fosters.
“We probably have about three decades of liquor industry experience between us,” Mobbs says.
The startup operates an online “double-sided” marketplace aimed at bringing together consumers and suppliers in a highly vetted offering the founders liken to services such as Airbnb and realestate.com.au.
But while anyone can list a house on either of those platforms, Winery Lane differs in the level of exclusivity and selection done by the founders when it comes to considering wineries looking to sell their wares, with Mobbs saying the company has limited the supply side.
“We’re only looking for Australian wineries, and only ones we think are from premiere growing regions. We want ones with a really good reputation, and ones that well represent their growing region,” he says.
Speciality a point of differentiation
The founders say this is one of the things setting Winery Lane apart from competitors in the online wine marketplace space, such as Vinomofo, although Mobbs stresses his startup will never go for the ‘catch of the day’ business model, saying companies have already cornered that market.
Instead, Winery Lane’s value proposition comes from its specialised offering to customers, and while it’s not trying to bring wine “elitism” into the digital world, the founders acknowledge the platform is definitely aimed at niche consumers.
“It’s for the consumer out there who’s interested in wine, and they want to understand the background to the wine. Why is this white wine pink? Where did it come from? What separates that winery from other wineries in the region?” says Mobbs.
“How can we take the wine buying experience, which many consumers find fraught with difficulty, and give them some sort of understanding and assurance over the quality of wine they receive? We’re trying to take the risk away from the customer.”
“We’re not looking for consumers just interested in a bargain hunt, the notion of discovery has to really drive them.”
And it’s this offering of exclusivity that Mobbs recognises is essential to the success of his business, saying the number one factor which could limit Winery Lane’s growth moving forward is a deviation from this high quality.
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“We have to maintain our standards in terms of winery selection. As soon as we drop that to get numbers on the books, that’s the moment we lose credibility. We’re looking to grow at a steady pace and maintain the reputation of our wineries,” he says.
$800,000 round currently closing
The growth will be aided by a currently running $800,000 funding round Mobbs hopes to have closed in the next couple of months, saying a number of investors are nearly locked in. This adds to a $750,000 seed round closed last year, bringing the total amount of soon-to-be investment to $1.55 million.
Though some might baulk at finding funding for a wine venture, Mobbs says it’s been fairly straightforward but acknowledges “any time you try to raise investment is a risk”.
“It’s down to the story you can tell, and how it resonates with investors,” he advises.
“It’s also about picking the right investors to be a room with. If you get someone who doesn’t understand wine or your business model, you’ll just spend most of your time explaining it to them.”
After closing the round, Mobbs says the startup will be focused on doubling down on Australian growth.
“Right now we’re focused on hitting our targets in Australia, but we do still have those Friday afternoon blue sky sessions. More expansion will happen, but it’s a very different environment when looking overseas.”