Online retail giant Catch of the Day has tipped it will launch a new online wine sales site next month as the company continues its expansion into more niches, following the successful growth of its group-buying and grocery ventures.
However, the online wine space already contains many competitors and experts warn the company will need to open its supply chain in order to succeed.
Chief executive Gabby Leibovich has also revealed to SmartCompany the network’s sales have continued to remain strong and the company is still on track to reach $250 million in revenue this financial year. He, however, would not go into detail about the company’s move into wine.
The expansion into online wine sales comes as a number of established players have already attempted to corner the market, including Woolworths’ Dan Murphy’s, along with pureplay online companies such as Cracka Wines.
Woolworths opened the online channel for Dan Murphy’s early last year, although Grey’s Online had the market cornered for years.
Cracka Wines, which launched in 2010, has also been growing steadily, turning over between $20-30 million last year with a target for $100 million in the next five years.
According to Telsyte research, the beer, wine and spirits category is the ninth largest out of 18 ecommerce categories.
Telsyte senior research manager Sam Yip says the move makes sense for Catch of the Day, which has built its reputation on maintaining strong supply channels and shipping goods in bulk.
However, he says there are plenty of challenges.
“The best wine sites have really large product ranges, really strong relationships to increase those product ranges, and have great skill in terms of logistics and getting things out.”
“Catch of the Day moving into wines is a smart move because they have the logistics to fulfil orders, they have a massive warehouse and that’s a big criteria for coming into online, as wine is sold usually in bulk or large containers.”
“But being able to partner with more suppliers and give customers that range is extremely important.”
The move fits into Catch of the Day’s strategy to open new sites based on various niche categories, with Leibovich saying the company needs to remain flexible enough in order to chase areas of high demand.
Both the group buying and grocery stores were built on this premise, but Leibovich has said the company will be pursuing more niches based on that strategy.
“They do have the competitive advantage because of this huge range of customers,” Yip says.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
