Tim McLaughlin-Green has spent more than 20 years supplying wine to UK restaurants through his business ‘Sommelier’s Choice’. Unfortunately, the Covid-19 pandemic and resulting shutdown virtually wiped out his income overnight.
However, McLaughlin-Green, like so many struggling wineries and distributors, has changed his business model to embrace direct-to-consumer sales. After the lockdown began in March, he needed to get a store online as soon as possible. The solution was Shopify, a web application which lets entrepreneurs to create e-commerce portals with a minimum of fuss.
“My understanding of e-commerce is minimal, so I took advice from a friend who runs a website development firm. He suggested that I use Shopify to start my DTC business, as it’s very user-friendly and quick to set up,” says McLaughlin-Green. “I haven’t regretted it.”
An out-of-the-box online store
Canada-based Shopify was founded in 2004 by German-born entrepreneur Tobias Lütke, who hit upon the lucrative formula of providing small businesses with an e-commerce solution that did not need independent software. The advantages to sellers are numerous: every one of Shopify’s registered domains are hosted on a central server in Canada; the business does not have to pay for web hosting, and the online store can be managed from any location in the world. All that is needed is internet access. Today, Shopify has merchants in over 174 different countries.
Even better, individuals can create an online retail store without knowing anything about website coding, while the service also allows traders to customise their site with a wide range of themes and templates. In addition, the tools needed to create and market an e-commerce portal, such as a payment processor and analytical tools, are provided. There are several standard packages available: the ‘Basic Shopify’ subscription costs $29 per month, while the superior option ‘Shopify’ is $79. Yet another tier gives access to more features, including lower credit card transaction fees.
McLaughlin-Green says that not only is the site easy to manage, but it gives “great insights on how people use the site and helps us to understand what products are working well.”
The platform does not offer special safeguards to regulate the sale of alcohol online; it is left to the owner to comply with national and state laws. The logistics of shipping goods are also managed by the seller, though Shopify helps users to set different shipping charges, such as weight-based rates and flat rates. McLaughlin-Green says using Shopify to sell wine is cost-effective. “The subscription costs we feel are less than the technical costs for a developer to keep the site secure,” he points out.
Wineries are also choosing it
All of this explains why both struggling distributors and pressurised wineries are now using Shopify to sell online. Australian winemaker Hugh Cuthbertson is the founder of Victoria-based vineyard Cheviot Bridge and an experienced wine marketer. And yet, until Covid-19 materialised, he never imagined using Shopify to help his business stay profitable.
“The pattern of our Shopify sales during the pandemic has been very interesting,” says Cuthbertson. “During the first lockdown in Melbourne we sold good quantities – there was a mood of general acceptance and ‘life must go on’. But the mood during the current, second lockdown is much gloomier. I think consumers are looking for cheaper wine and spirits to be delivered to their door.”
He Cuthbertson agrees that Shopify has been useful in helping to manage the financial pain caused by coronavirus. Yet unlike McLaughlin-Green, he does not regard the brand as very cost-effective.
“Shopify is reasonably effective and easy to manage,” he says. “However, I’m not sure I would regard Shopify as ‘good value’ – it’s simply an order platform and it is not cheap to run.”
But it is undeniable that Tobias Lütke’s vision for global e-commerce is well-positioned to take full advantage of the pandemic. In 2020, the firm expanded its offering to include financial services: these include providing loans to struggling companies, to enable businesses to make the switch to digital trading. A growing number of Shopify’s clients could well be in the wine business, as Covid-19 accelerates the need for online retailing in a globalised marketplace.