China’s ongoing fixation with the online environment is changing the nature of its own wine trading environment as well as perhaps leading future global changes in the way in which wine is bought and sold. Online retailers with no wine history are taking on wine with energy, enthusiasm and piles of cash behind them.
It’s an environment that is changing so quickly that business modeling simply has to be a fluid thing. Three years ago you would never have thought of ordering wine online from either Amazon.cn or the Alibaba group’s Tmall or Taobao. Companies like YesMyWine (Shanghai based) and WineNice (Beijing based) were the top dogs in town but are well short of that status today.
According to Wine Intelligence, 35% of regular Chinese wine buyers to have bought wine in the previous 6 months bought wine from JD.com in March this year, up from 29% the same time the previous year. Tmall comes in at 32% (up from 28%), Jiuxian.com at 26% (27% last year)and Amazon.cn has skyrocketed to 25% from just 9% the previous year.
A year ago Chinese people were being introduced to the idea of buying things via WeChat Pay. Today a massive proportion of WeChat’s 806 million-plus users have adopted this system. You hardly need cash any more in China.
Aside from the technological change as it relates to whom you are buying from and how you are paying, the most significant change is just beginning to take shape. It’s a potential change in the very nature of wine journalism or criticism, and how it relates to the wine marketplace.
Siwei Zhu is one of the founders of TasteSpirit, a four year-old online wine platform that is currently enjoying success and growth. He is one of the top group of young Chinese wine entrepreneurs and professionals and has a very clear idea of what’s going on there.
‘The most active online sellers in China today are Amazon.cn, JD.com and TaoBao. But if I’m an average customer and I go to one of these large sellers, I’m faced with more than 100 choices. So I’m totally lost and confused. I need something to help me understand the classifications, the regions and the differences between vintages’, he says. Secondly, regardless of the incentives they might face to buy, buyers are still concerned over whether or not the wines they buy actually suit their own taste.
‘So the online market needs to give information and education, but its also needs to find a way to interact with customers online and offline to help them discover their own preferences. The challenge is to create a one-on-one relationship with the wine buyer’, says Zhu.
Responding to this, Zhu explains that the big players are building up their own ecosystem of content, hiring wine writers and collaborators, creating connect channels on their own ecommerce platforms to help people learn, then buy.
Smaller companies like RubyRed are working to accumulate a large base of private clients and actively promoting offline education and tasting activities. It hosts more than 100 tastings in Shanghai each year and their clients can connect with it offline or online using either WeChat or via its website. Other companies like Winehoo are coming from a more technological base into the wine-selling environment, using their ability to interact with customers as their key.
But here is the challenge: as they expand, these business are more and more taking on the roles of importers rather than retailers, as they do so moving from a more agnostic view of wine to being closely linked with specific brands. The risk is that in China there is a strong need for opinion to be independent. This issue is very blurred in Australia today, and the confusion when retailers and auctioneers start allocating ratings and generating ‘independent’ commentary is only becoming more evident. China might well follow, but in its own way.
Siwei Zhu remarks that ‘If the communicator and the retailer are giving the customers what they want, this will increase the trust between the provider and the customer.’ It is even possible in future, he suggests, that consumers might buy wine from the critics or communicators. ‘Writers might end up being traders, selling products closely linked to their own brands and via the channels they have created.’
To some extent this has been the bread-and-butter business model for independent retailers for years: you get to know your customers personally and you give them what they want with a high level of service.
The difference with China in this instance is that it’s actually happening online.
