Get Big Fast

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Sendwine.com
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Sendwine.com

• Sendwine.com Introduction
• History
• Customer Service Provided
• Business Model
• Target Customer
• Retailers
• Competition
• Marketing
• Market Segment
• Regulatory Issues
• Building Online Trust
• Sendwine.com Organizational Shift
• GBF?
• Conclusion
• Questions?

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Sendwine.com Introduction

• Founded by Mike Lannon. (20 years of business
  experience but no technology background)
• He founded the company because he once had
  problems with state laws trying to send a bottle
  of wine, from Boston to Atlanta, to his fiancee.
• Was established to help consumers send wine and
  other gifts over the Internet.
• He developed a business plan to create a service
  that would send wine as easy as sending flowers.
• Ended up investing his whole life savings of
  150,000 into the business in a risky move.
• Had to somehow bypass the old laws that dated
  back to the days of Prohibition that stated that
  liquor could only be sold to retailers by
  licensed vendors.
• Set up a FTD-like network that included many fine
  wine merchants throughout the country.
• Took phone orders to start of with.
• He later was introduced to the idea of Internet
  business and in 1998, got investors to invest
  500,000 to fund website development and
  marketing.
• Lannon purchased the URL Send.com for 20,000
  in fall of 1998 to expand into a broader audience
  just in time for the Christmas season.
• Started of with 8 employees.

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Sendwine.comIntroduction Cont

• It was crucial for Sendwine.com to launch before
  the 1998 Christmas holiday season.
• Fliers were sent to existing customers and the
  fliers described how they could do all their
  business easier through the Internet.
• The company launched a radio ad campaign in New
  York, Boston, and San Francisco that was
  150,000.
• The successful Holiday season of 1998 resulted in
  quadrupled sales and just under 1 million in
  revenues.
• By March, Lannon had 10 million invested in his
  company from a number of VCs.
• Lannon, now 40 years old, was in the middle of an
  E-commerce revolution.
• His new goal was to send other gifts, as well as,
  wine.

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Customer Services Provided

• The customer service provided was too create a
  company that worked in compliance with State Laws
  and Regulations
• Sendwine.com would take the orders and fax them
  to one of the 100 networked retail stores that
  would carry out the order and deliver it.
• After delivery was complete, Sendwine.com would
  reimberce the retailer
• Courier Charges.
• The retail price of wine.
• Taxes Incurred.
• The number one service was too cater the customer
  with the perfect gift.
• One important key that was marketed was the
  timely efficiency in which the gifts arrived at
  their recipients.
• The wine bottles were each individually wrapped
  and polished and decorated.
• The wine bottles also came with a stylish booklet
  on storing and serving wine.

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Business Model

• Main goal was to establish an E-commerce business
  that would be fast and efficient with orders
  customers put in.
• One key goal, in the business model, was to make
  the gift stylish and tailored to each customers
  wants and needs.
• Wanted to eliminate storage and distribution
  costs and guarantee speedy delivery.
• Offered 40 different gift packages that ranged in
  price from 39 to 750.
• Prices were higher than brick and mortar
  retailers but most people on Internet were not as
  price sensitive when buying gifts.

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Target Customers

• Four different customer segments
• The busy Professional
• Usually a male and gift needed to be sent right
  away to make customer look good.
• The frequent gift-giver
• Generally female and packaging was crucial to
  make it look as if they packaged the gift
  themselves.
• The mass-market consumer
• Used site to a less extent than the first two.
• The wine expert
• Also used the site to a less extent because of
  the different prices and tended to know a little
  more about pricing of wine.

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Retailers

• Avoided larger retailers and preferred to do
  business with mid-size retailers.
• Big store would look at Sendwine.com to just
  another customer.
• Small stores lacked the inventory.
• Mid-sized stores gave Sendwine.com the potential
  to be the best customer .

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Competitors

• Company believed that main competition was the
  inertia of busy people.
• Designed to overcome this inertia.
• Major competitors
• Harry and Davids
• 911 gifts
• eGifts
• Yahoo became a big competitor in 1999 when they
  spent 49 million to acquired the ability to host
  small and medium sized retailers.
• Amazon introduced their version of gift services
  in November 1998.
• In 1999 Amazon stepped up it threat with the
  introduction of their own E-commerce host site
  for thousands of smaller and medium sized
  retailers.
• FragranceNet.com
• Garden.com
• GourmetMarket.com
• Virtual Vineyard

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Marketing

• Sendwine.com now realized that with their new
  found VC funding wealth of 10 million, they
  could escalate their marketing efforts.
• In 1999, Sendwine.com decided to take marketing
  campaign to the next level from the previous
  radio advertising in New York, Boston, and San
  Francisco.
• Started advertising in magazines and journals
  like the Wall Street Journal.
• Eight of their 46 employees were dedicated to
  marketing.

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Market Segment

• Due to the record breaking 1998 online retail
  buying patterns, the new idea was online shopping
  would increase and it was the wave of the future.
• Number of websites offering gifts increased in
  1998 and the quality of service for these sites
  also increased.
• Overall retail sales were expected to hit 29
  billion by 2002, up from 5 billion in 1998.
• Of this 29 billion, 1.4 billion was expected to
  be from specialty gift sales.
• Sendwine.com had a goal to capture just 5 of the
  market share for specialty gifts and be worth 70
  million by end of 2002.

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Regulatory Issues

• Some of the competitors had been sending wine
  across state borders illegally for years.
• Wine was sent via UPS or federal express.
• US House of Representatives made bill to stop
  direct wine sales to customers via mail services.
• Resulted in crackdown.
• Laws now made it illegal to send wine across
  state borders without proper state license.
• Sendwine.com avoided this by having retailers who
  fulfilled their orders in each state.

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Building Online Trust

• Sendwine.com did survey in 1999 and came to 2
  conclussions
• First, it was found that one third of first time
  visitors bought gifts.
• Second, Sendwine.com had to overcome credibility
  and quality with their customers.
• This was done through a professional looking
  website and the promise of secure online
  transactions.
• Website Design, Content Development, and
  Marketing Strategies were crucial to enhance
  customer trust.
• Website Design included developing a website that
  offered simplicity and flexibility in navigation.
• Hired a Director of Web Design, Paul Griffiths,
  and gave him the task of redesigning the website.

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Building Online Trust Cont.

• Content Development would include content that
  described certain wines and more information
  about products on the site.
• The Marketing Strategy shifted from banner ads
  and portal deals to traditional media like TV,
  radio, print, and billboard ads in late 1999.
• Sendwine.com had to decide which marketing
  technique to entrust in.

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Sendwine.com Organizational Shift

• Lannon decided to develop new website called
  send.com to provide for other gifts.
• These gifts would be like cigars, beers, or
  gourmet food.
• Lannon had to overcome new challenges to keep up
  with the changing times.
• Recruiting was major concern because talented
  people were needed to keep business running.
• Lannon even considered weather he was the right
  man to still be the CEO with the ever changing
  times.
• One key advantage Lannon had was to keep people,
  not with larger salaries, but with a great work
  environment and stock options.

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GBF?

• Network Effects
• Low to Moderate due to the fact that there are a
  lot of people who drink wine, but these people
  vary in different lifestyles. It is just too
  much of a wide range of customers.
• Scale of Economics
• Scale of Economics would be fairly moderate and
  profit margin would be moderate also because wine
  is an item that can be just as easily bought at
  any liquor store or supermarket. The key is the
  customer service that Sendwine.com provides.
• Customer Retention
• Low for the same reason.

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Conclusion

• - Sendwine.com is still alive today and offers
  services from wine to whiskey to beer.
• http//sendwine.com/

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Questions

• Questions??????????