Its a Lot to ask for – Lot18 Launches in UK

Last night a select group of individuals that combine an interest in wine with the habit of spending a lot of time talking about it on social media, gathered at Quo Vadis. The table groaned under the combined weight of the iPhones and miscellaneous mobile internet paraphernalia of David Lowe (@bigpinots), Natasha Hughes (@londonvino), Simon Burnton (@cellarfella), Tara Devon O’Leary (@tara_devon), Matt Walls (@mattwallswine), Denise Medrano (@thewinesleuth), Lucy Shaw for The Drinks Business, and yours truly (@thirstforwine)

Our hosts were the combined talents of Tom Harrow (@WineChapUK) and the UK Lot18 team – a formidable line up that included co-founder and entrepreneur Philip James over from the US. The reason for the gathering was the launch in the UK of the highly successful US Lot18 business.

Click here to visit the Lot18 UK site (note: this link has my affiliate code embedded, as I’m keen to test this and know if these things actually work)

Lot18′s business model falls under the “Flash Sale” category, but this is maybe a bit unfairly simplistic way of thinking about them. Flash Sales sites focus on selling ‘lots’ of highly discounted products for limited periods. The combination of attractive products, limited time offers and headline grabbing discounts are enough to get shoppers’ “SALE” muscles twitching and therefore the model has been very successful in the US not only for wine, but fashion, design, and more.

In the US, the big players along with Lot18 are The Wine Spies, Cinderella Wine, Wine.Woot, Wines Til Sold Out and a few others, but so far none have made it big in the UK, although Naked Wines’ Marketplace 2 might claim otherwise.

In my view there is a distinction to be drawn between those sites that are like retailers and give the consumer information on the brand they are buying (such as Lot18 and The Wine Spies), and those that are like classified ads and focus only on the discount. Discounted prices generally harm a brand but are sometimes necessary, but if it can be done for positive reasons, such as an introduction to wine brands that you may not have tried before to encourage future purchase, then they can have benefits too.

Flash Sales sites are particularly good at finding new homes for small lots of more expensive wines that retailers or wineries would like to get rid of. You would have thought that this should work well in the UK, which is why Lot18 are spending some of the $45m raised in funding for their US based business on launching in the UK.

The question is … what wines will they stock, and will we consumers take the bait?

I have observed some of the sites that have tried this in the UK in the last few years, and they tended to list wines that were not that special and were mainly older vintages of wines that move fairly quickly. There was little “collectability” in the wines.

Lot18 say that they are investing in creating an attractive list of wines that are not just unsold inventory from existing importers (though they will be cherry-picking this) but also wines that they import directly from wineries from around the world, especially that middle tier of California and Oregon wineries whose wines rarely reach the UK consumer. Their UK team of Buyers, including Gus Moore Danowski, were certainly keen to show off some of the wines they have already found.

We will have to see what wines they get their hands on, and what kinds of discounts they will be able to offer, but the arrival of Lot18 in the UK is exciting and might mean Naked Wines are no longer the only innovative wine retail model in town!

Last night we were lucky to try 3 of the wines that you will be able to buy (visit the site to see what is currently “featured”); the deliciously rounded and creamy 2009 “Blancaneaux” from Francis Ford-Coppola’s Inglenook Rubicon Estate, a juicy, lighter style of Barolo, the 2004 Vigna Croera de la Morra from Bruno Giacosa, that is for drinking now, and a Riesling Kabinett that ended up being paired uncomfortably with an almond cake and poached pear so I can’t say that much about.

I look forward to see how this develops and do let me know if you spot any special deals (after you’ve secured your own, naturally)

UPDATE (03 March 2012): Here are some of the posts that the others present that evening have also published:

Wine Passionista: Helpfully profiles the Lot18 team
The Drinks Business: Lucy obviously had a little more time to ask questions (the professional!)
Lot 18: Not a lot to like (yet) by @cellarfella Simon Burnton

 

  • Robert McIntosh

    I forgot to mention that the Champagne Robert Moncuit Grand Cru B de B (http://ow.ly/9pOzh) was really delicious too

  • arnold waldstein

    Really well done piece Robert. I’ve been watching Lot 18 since the beginning but not a big fan. Mostly because they’ve adopted points as their scale of value. In the US at least. That is my personal bias of course. They do have curators and provide some well written info but at their core, they sell to the points scale. To their credit they are extending this metaphor beyond the show off brands but point scale it is on a time and inventory based flash scale. They do this really well, just I think not the future of where the online market is going. From the numbers being floated around I would quibble with whether they are indeed a success. Yet at least.I don’t consider valuation of their last round of financing as an indicator of success. A monster round it was for certain but their model is still unclear as a winner to my mind.The grapevine numbers are about $2M gross a month at sub 15 points of margin with some 30-50% of that holding inventory. I’d love to have more info on their model but its’ scarce cause they are private. If there is something that I’m missing, please do share.Greatly appreciated this read. The more I know about this the better. Thanks for posting this.

  • The Sediment Blog

    Lot18?s opening offer in the UK is Pontet Canet 95 “reduced” from £125>£90. But according to Vinopedia, 5 UK #wine merchants list it under £75!You would have thought they would have opened on a more impressive, indeed possibly loss-leading offer…

  • Robert McIntosh

    Thanks Arnold. I’ve been keeping half an eye on this market for a while. It is interesting, but I am not wholly convinced about it myself. There’s money to be made for some, but is it what the trade needs? I don’t think they are likely to be as hooked on points in the UK simply because the average consumer does not care or know anything about points.I must also agree with The Sedimenter … I am a *little* surprised that the initial offers were not more headline grabbing. I’m torn because I do honestly think that discounting is killing wine (no-one trusts prices any more) but if this is your model, would you not attract lots of the right sort of customer with something particularly juicy to kick things off?Let’s keep watching :)