To overcome poor Brazilian roads and improve delivery, Wine.com.br uses airlines and air couriers to ship 85% of all orders.
Mark Brohan , Research Director
A little challenge like shipping products and guaranteeing next-day delivery in Brazil where 70% of the roads are classified as bad isn’t stopping Wine.com.br from its goal of generating $500 million in annual web sales over the next several years.
If Wine.com.br, which is owned and operated by W2W E-Commerce de Vinhos SA, can’t always count on Brazil’s poorly built and maintained national highway system to deliver wine and assorted products to its customers, it flies over them. Wine.com.br, which grew web sales year over year 101% to $58.4 million from $29.1 million, these days is shipping fewer parcels by ground transportation and more by air carrier. The final delivery from the airport to the customer is handled by a local courier service or in some big cites by a fleet of delivery vehicles owned by Wine.com.br with licensed and bonded commercial drivers.
Shipping orders by air isn’t cheap in Brazil, a country slightly larger in area than the 48 contiguous states of the United States. In 2013 Wine.com.br spent about 15%, or $8.8 million, of total revenue on shipping and fulfillment compared with 14.3%, or about $4.2 million, in 2012, says chief marketing officer Ricardo Flores. But finding new and innovative ways to get around infrastructure problems like bad roads isn’t exactly new for Wine.com.br, No. 63 in the 2013 Internet Retailer Latin America 400.
On average Wine.br gets new orders to wine buyers in about four days and in Brazil’s biggest cities such as São Paulo the next day. That’s not bad in Brazil where the national postal service, Correios, takes about five days to deliver packages, say big Brazilian web merchants such as online sporting goods retailer Netshoes.com (No. 4). Wine.com.br isn’t going to wait for the Brazilian government to fix roads or the post office to improve service, Flores says. Instead the web-only merchant likes figuring out a solution to a problem.
Wine.com.br now has standing relationships with multiple Brazilian air freight companies or big in-country airlines such as TAM, and its own fleet of vehicles stationed at select large airports around Brazil. “If there is space available on a plane we take it,” says Flores. “The airlines know us pretty well.” Today about 85% of all orders are shipped by air and delivered by its own drivers or local couriers, compared with 80% a year ago, he says.
Wine.com.br introduced a fleet of company vehicles last year and contracted with commercial drivers around a few big Brazilian cities to deliver about 9% of the e-retailer’s orders in 2013. That rate is expected to increase to about 14% in 2014 and continue to grow. “Our fleet is only in two states, but we will expand next year,” Flores says. There are 26 states in Brazil and a federal district that encompasses the capital of Brasilia, but much of the country’s population is concentrated in the southeast, around São Paulo and Rio de Janeiro.
If a commercial solution to an e-commerce challenge isn’t available, Wine.com.br, which has been selling online since 2008, will develop its own in-house solution. The online retailer operates its own fulfillment center and stores about 100,000 products at its company headquarters in Espírito Santo. Wine.com.br. also operates its own call center with 70 full-time customer service representatives. “We invest in our own infrastructure because we know our business and what our customers want,” Flores says. “We have our reps trained to answer 95% of all calls within 20 seconds.”
With its own call center agents knowledgeable about the retailer’s 2,000 wine labels, Wine.com.br is building a sustainable and diversified business, Flores says. Currently Wine.com.br has a conversion rate of about 7% and an average ticket of about $110. But more important, the company’s business is diversified with about 52% of all sales coming from subscriptions to its wine club and 48% from individual sales, Flores says. In 2013 new shoppers made up 41% of all orders placed online compared with 59% from return shoppers.
Wine.com.br.com is profitable, but the company isn’t breaking out any specifics. “We’ve always been very cost-centric,” Flores says. With a growing and sustainable wine business, Wine.com.br.com is expanding into other product lines. For example, the company is investing about $23 million to build its own coffee business, which includes grinding and roasting its own beans. The company will begin construction on a stand-alone plant this year and expects to begin full production in about 18 months. The coffee plant could eventually have a work force of more than 200 employees.
Wine.com.br likes being first in an emerging Brazilian e-commerce category, and developing its own infrastructure because the merchant want to capitalize on emerging opportunities in Brazil, Flores says. “We did wine, now we are doing coffee and then beer,” he says. “We like being creative.”