Yesmywine.com Tastes China's Wine Industry
By 2009-4-8 9:10:00
"Chinese consumers drink one-third or one-tenth of the wine that the average Japanese or French consumer will drink in one year," according to Yesmywine.com CEO Liu Jun. JLM sat down with Liu, who is also the chief financial officer of Yesmywine.com parent Shanghai RoadWay Direct Marketing Services Co. Ltd, to discuss why Yesmywine.com believes in the domestic wine market.
JLM: Why did you decide to move into the business-to-consumer (B2C) e-commerce market?
Liu Jun: Actually, we got the idea from our Roadway clients. Roadway revenues grew 150% year-on-year in 2008, with more than 1,000 clients using our platform and database. We figured we could move into direct sales and, after careful consideration and putting together internal and external funds, decided to start selling wine directly through a B2C site in 2007.
JLM: Why wine?
Liu: There are three major reasons we sell wine. First, China has a large potential market that is in a high-growth stage. Wine sales exceeded RMB 15 billion in 2005, while annual sales growth reached 20% in 2007. Domestic consumers drink one-third or one-tenth of what the average Japanese or French consumer will drink in one year, which means there is still enough room to grow. At the same time, the domestic market is limited to a few well-known local brands, with no effective sales channels for imported wine. So a multi-channel sales platform helps to lay out different types of wine and disseminate wine culture.
Secondly, wine retail enjoys a very high margin; Yesmywine.com currently has a profit margin of over 40%. Furthermore, our large database makes it easy to find our target users: people age 25-45, with monthly family income of more than RMB 3,000.
Third, repeat consumption. Twenty percent of our customers are repeat buyers who spend about RMB 200-300 each transaction, or an average of RMB 90 per bottle, compared to about RMB 80 per bottle at the supermarket. Each repeat customer brings in average revenue per year of more than RMB 1,000. The rest of our customers are one-time buyers that tend to drink only on holidays, at weddings, etc.
JLM: How many users do you have so far?
Yesmywine.com currently has more than 300,000 registered users, who receive wine culture information via email or catalog. About 8% of registered users have made purchases on the site.
JLM: Coming from outside of the wine industry, how does Yesmywine.com deal with purchasing, logistics and inventory?
Liu: We expanded our team with specialists to solve these kinds of new questions. Our product manager came to us from a wine company, and we purchase direct from wineries based on customer orders.
So far, we outsource logistics and operate one small warehouse in Shanghai. We guarantee Shanghai delivery within 48 hours and have started accepting payment on delivery in Hangzhou, Guangzhou and Shenzhen in addition to Shanghai. We also plan to expand our coverage into Nanjing later this year.
We will be optimizing our website in April.
JLM: Any other plans for expansion?
Liu: We have been in touch with a Beijing-based produce vendor who wants to set up a B2C platform like Yesmywine.com. Roadway has agreed to help build the site and use its customer database to market the platform. Roadway intends to work with other companies on similar outsourcing projects to become a kind of maker and marketer of B2C platforms.
JLM: Why did you decide to move into the business-to-consumer (B2C) e-commerce market?
Liu Jun: Actually, we got the idea from our Roadway clients. Roadway revenues grew 150% year-on-year in 2008, with more than 1,000 clients using our platform and database. We figured we could move into direct sales and, after careful consideration and putting together internal and external funds, decided to start selling wine directly through a B2C site in 2007.
JLM: Why wine?
Liu: There are three major reasons we sell wine. First, China has a large potential market that is in a high-growth stage. Wine sales exceeded RMB 15 billion in 2005, while annual sales growth reached 20% in 2007. Domestic consumers drink one-third or one-tenth of what the average Japanese or French consumer will drink in one year, which means there is still enough room to grow. At the same time, the domestic market is limited to a few well-known local brands, with no effective sales channels for imported wine. So a multi-channel sales platform helps to lay out different types of wine and disseminate wine culture.
Secondly, wine retail enjoys a very high margin; Yesmywine.com currently has a profit margin of over 40%. Furthermore, our large database makes it easy to find our target users: people age 25-45, with monthly family income of more than RMB 3,000.
Third, repeat consumption. Twenty percent of our customers are repeat buyers who spend about RMB 200-300 each transaction, or an average of RMB 90 per bottle, compared to about RMB 80 per bottle at the supermarket. Each repeat customer brings in average revenue per year of more than RMB 1,000. The rest of our customers are one-time buyers that tend to drink only on holidays, at weddings, etc.
JLM: How many users do you have so far?
Yesmywine.com currently has more than 300,000 registered users, who receive wine culture information via email or catalog. About 8% of registered users have made purchases on the site.
JLM: Coming from outside of the wine industry, how does Yesmywine.com deal with purchasing, logistics and inventory?
Liu: We expanded our team with specialists to solve these kinds of new questions. Our product manager came to us from a wine company, and we purchase direct from wineries based on customer orders.
So far, we outsource logistics and operate one small warehouse in Shanghai. We guarantee Shanghai delivery within 48 hours and have started accepting payment on delivery in Hangzhou, Guangzhou and Shenzhen in addition to Shanghai. We also plan to expand our coverage into Nanjing later this year.
We will be optimizing our website in April.
JLM: Any other plans for expansion?
Liu: We have been in touch with a Beijing-based produce vendor who wants to set up a B2C platform like Yesmywine.com. Roadway has agreed to help build the site and use its customer database to market the platform. Roadway intends to work with other companies on similar outsourcing projects to become a kind of maker and marketer of B2C platforms.
From jlmpacificepoch.com