How is the fine wine industry different from other industries?
Major differences between the wine industry and others are largely around inventory, encompassing scenarios that generally applicable software is not engineered to support.
Where else might a business buy, split, part-sell, perhaps even buy back again, without ever actually taking ownership of the physical product?
What other business sells physical products as futures months or years before it’s finished (i.e. bottled) and ready to ship from the producer? Indeed there are some countries that would consider such a transaction to fall outside of their legal framework for selling to consumers.
When else does a sales process allow a customer to purchase, then only take part of the order, perhaps saving the rest for later in storage?
Which other retail business sells products to customers, and then facilitates the consignment or brokerage of the same products back through them years later, under very specific and advantageous duty and sales tax suspended (In Bond) rules?
The fine wine business, driven by product scarcity and range, has evolved other, flexible ways of dealing with sources of supply.
Of course conventional purchase and sales processes, as seen in other business operations, are commonplace, but so is the selling of virtual stock, that turns the traditional order processing workflow on its head, with the order processing cycle starting with a sales order and triggering a back-to-back purchase order.
Pre-allocations for a defined period of time from importers represent a variation on the same theme.
Broad-based, cross-industry software requires customising to handle these scenarios, typically via workarounds, resulting in the introduction of long-winded or compromised processes to satisfy the needs of the wine market.
Why does industry-specific software matter?
Software should make users’ lives easier, reduce the administrative overhead, and enable team members to be more productive as a result of spending more time buying, selling, and developing customer relationships. Well designed industry specific software will reflect efficient workflow management, whilst providing the flexibility sometimes required.
Connecting to industry sales and sourcing channels, such as Liv-ex, helps identify more opportunities to transact. Mastering data is the precondition to effective multi-channel sourcing and selling.
Mastered inventory on your business management system underpinned with referential product information, accurate definitions and rich content, helps you to sell wine.
It provides the basis for a low-maintenance e-commerce set-up, mitigates the risk of overselling, and opens up the potential use of parallel digital channels.
Industry specific software that’s shaped by the industry, for the industry, creates an ecosystem based on mutual benefit.
The ethos is very different from an approach to customising or adapting cross-industry software, typically via resellers (third party implementation companies). Clients don’t pay for development requests, or change requests. Rather they get evaluated by product managers and other clients who determine the applicability of an idea to the industry as a whole, or at least a segment of it. Improvements and extensions are developed, tested and released based on their prioritisation within the roadmap.
As new clients onboard, and existing ones grow and adapt their business operations onto a more efficient footing, the roadmap constantly evolves based on industry input. This dynamic is self perpetuating, and ensures the software platform is always improving and expanding, led by the market we serve.
Businesses that imagine software per se is able to deliver a competitive advantage are taking themselves down a blind alley. It’s the development and execution of a business strategy (using fit-for- purpose and efficient software) that delivers a distinctive offer, clear market positioning and a sustainable competitive advantage. The evolution of an industry specific platform that reflects the sum of best practices is far more adapted to deliver successful business outcomes than attempting to define, scope, manage and implement a proprietary system or an ERP framework to your needs.
As Nick Martin, CEO of Wine Owners puts it:
“Cloud computing has made it a lot easier for technology to reconfigure around evolving business models. We’re moving from the 1990s tech world view of ‘everything under one roof’ to a much more application-specific, connected, collaborative world where the effect of the network is becoming hugely significant. The effect on the global fine wine market will be re-defining.”
Industry specific service as a software (SaaS) is designed to be easily configured, amounting to little more than a series of setup parameters. That means you don’t pay for software upfront. You simply pay for migrating the data you need to carry across and monthly fees that cover licensing, support and the development roadmap.
There are no costly consultants who are compensated to sell customizations. An industry specific software exists for the benefit of the market sector as a whole, so requirements and suggestions that have general applicability get added to the development roadmap.
Managing migration risk
Anyone who has gone through a data migration to a new system knows this is one of the most critical aspects of successful software adoption, and there’s no way around doing this work unless you’re a start up. So why entrust such an important part of the process to a business that isn’t intimately familiar with the industry, and that doesn’t have a well developed suite of data processing capabilities?
Data processing, and in particular pre-processing, benefits from a referential database. It doesn’t mean a business can’t have flexibility in deciding on how to display product names, but it does help to quickly identify duplication issues, inadequate descriptions and other aspects of data quality.
Having software with pre-build referential data, LWIN codes, integrations with the likes of Liv-ex and LCB, saves your business set-up and data-entry time, meaning efficiencies are evident immediately.
Software purpose-built to ease daily operations of a wine importer, merchant, retailer or distributor, means you have a tailor-made solution to manage your workflows straight away. This means there’s no need for expensive and time-consuming customisation work, or for you to hire an IT consultant to study how to adapt the software to your business.
Indeed, custom charged-for development is the philosophical antithesis of an industry operating system. This is especially pertinent in a long-tail market composed principally of small and medium sized enterprises, which typically lack technical and project management skills. Within that market structure, businesses are far better off de-risking the process of adoption and software ownership, whilst benefiting from the network effects of being on a common industry platform.
Increased selling opportunities and broader market reach
Multi-channel selling is significant in the wine trade, which requires inventory to be listed concurrently across e-commerce, marketplaces such as Liv-ex, comparative search engines such as Wine-Searcher, in-store and more. Without one database that’s mastering all stock, cross-channel activity can become fractured, opportunities are lost and room for error increases.
Wine industry-specific software not only enables access to a broader, easy-to-reach addressable market, but affords wine businesses crucial control of stock positions, individualised and channel pricing and margin control, all from one centralised place.
Efficiency and growth
Business management software with an advanced understanding of fundamental operations applicable to a wine business, can more easily automate daily processes, such as;
- Sales and Purchase order processing
- Sector-specific inventory management
- Client and supplier management
- Shipments and transfers
To give a very simple example, a wine merchant or importer may want to manage a recent purchase order (or multiple purchase orders on one shipment) where only part of the order has arrived. They would like to split the order, applying numerous storage and delivery options, whilst tracking the remainder of the order.
Wine-specific software accommodates and simplifies this type of non-conventional process, with superior inventory control, integrated accounting and financial reporting, and warehouse reconciliation.
Multichannel selling involves digital channels, physical locations and face-to-face meetings and site visits. Therefore using a SaaS (service as a software) model, also ensures the software can be accessed anywhere, on any device, for remote or international trading.
Business controls for margin management
Margin management is particularly significant when selling to Ontrade, where a dynamic approach to individualised pricing within pricing groups is essential to manage the balance between retention and acceptable margins.
Without flexible frameworks that provide business control it can get messy, hurting the bottom line. Those controls are backed up with a reporting suite that enables analyses to be generated on the fly, helping you to verify how your business is performing.
Improved customer service
What’s not unique to the wine business, but appealing to any organisation is the desire to spend less time ‘messing’ with data and more time engaging with clients. Wine industry-specific software reduces time spent originating data and information, allowing a business more scope to manage inventory positions or broker client wine.
The most comprehensive industry-specific software will support services for client stored wine, including the ability for clients to interact with their own inventory. Let’s not overlook the reason why wine businesses offer storage services: to leverage the value of the proportion of wines sold to clients that wish to sell on at a future date.
Managing that incremental service has proven particularly time consuming for most, because almost all software isn’t adapted to handle the specific management and billing calculation requirements of a storage offering. Without an industry specific client storage (reserves management) solution the benefits of the service become outweighed by the administrative overhead of managing it.
Any wine business can surpass customer expectations for buying online with ease, by integrating and managing their e-commerce through the business operating platform that masters all inventory types, along with product definitions, pricing, grouping wines into offers, bottle shots, labels, reviews and scores.
Many businesses think that e-commerce needs its own management and effort, whereas operationally it should be considered a prime channel among the others, and that’s realisable when it’s fully integrated with a multi-channel, industry specific software platform underpinned with a fit-for-purpose referential database.
With manual processing comes room for error and the need for due diligence and substantial administration time demanded of your staff. Implementing dependable, industry-specific software relieves staff of those operational overheads considerably.
One step ahead for tomorrow
We’ve highlighted numerous challenges and complexities, but one of the most strikingly attractive aspects of the wine industry is the collaborative and supportive network of people involved. Finding a software provider that is embedded in the wine industry not only means your software solution is industry-specific, but that it stays relevant to and supports your industry into the future.