Innovation: the technology platform
- Wednesday, 30 May 2018
Once the value proposition established and the diversification strategy defined, winelivery had two opportunities to penetrate this new B2B market: either by developing the needed capabilities internally (what is called organic development or the “do it yourself” approach) or by acquiring other companies or establishing strategic alliances, in order to benefit from synergies. As a general rule, on the one hand, a firm with a new strategy decides to go for an organic development if it has no availability constraints, i.e. no need to look for partners that might help them in a specific sector or context or whose capabilities are complementary. On the other hand, a firm will privilege a merger or an acquisition when it recognizes a value added in combining the capabilities with the merged or acquired firm, being them strategic, financial or managerial.
Considering that winelivery is a startup recently entered in the market, Francesco and Andrea thought it could be useful to set up a collaboration with a company having already some experience and contacts to rely on at the beginning. That is why they decided to acquire, as already mentioned above, AVMilano. The strategic move had the objective of creating a synergy on the purchase of the products side. Thanks to the acquisition, indeed, winelivery incorporated, in a way, the distributor, forward vertically integrating part of the production process, which also contributed to reduce transaction costs. Moreover, AVMilano was already a player in the Horeca market in Milan, already dealing with numerous restaurants, bars and cafes, boasting established and loyal relationships with them.
The acquisition brought the following value added to winelivery:
- It could rely on a widely known brand in the Milanese Horeca market industry
- The service offered increased and became more efficient because the platforms were shared, which allows B2B customers to make many purchases at the time
- The two companies could share information , network of firms and customers
Winelivery, from its side, ensures fast delivery in at most 1 hour. This combination of factors allows restaurants and bars to reduce the stock, causing useless accumulating costs, thereby improving efficiency.
One of the main elements of distinction of winelivery is the innovative system of orders’ management. Innovation can be defined as the conversion of knowledge into a new product or service. In the case of winelivery, the process innovative solution is mostly represented by the new modality of placing orders and by the quick delivery. The online platform dedicated to the Horeca market is specific and different from that of the B2C market. The site www.horeca.winelivery.com is very well done, with a user friendly landing page that opens with the motto “The best quality and the best service for the professionals”. From the landing page it is possible to explore the value proposition, enclosed under the definition of “Competencies and Innovation” that explain the technological and networking synergies created by the relationship between winelivery and AVMilano. The menu upward allows to surf across the functioning of the service, the team, the catalogue and the wine producers’ stories. Another space is then dedicated to the profile access of the consumers, who can easily manage their private space and place some orders everytime they want. The platform is linked with an electronic system that instantly informs a winelivery manager that an order has been placed; the products are taken from the stock, packaged and prepared for the quick delivery.
After the launch in the Milanese market from January 2018, winelivery is now already exploring the results of the new business. The future prediction is to achieve €238,000 revenue in 2018 with a 5% growth month by month. With €570,000 from the B2C market and €105,000 from the adv selling to canteens, the Italian startup is preparing to close 2018 with a turnover of almost €1,000,000 after only 3 years of existence.
Focusing on the Horeca market, winelivery wants to achieve the highest possible market share in the shortest time possible, transforming it in the first source of revenue between its businesses. Said in “strategic” words, the Horeca will be the cash cow market for winelivery.
Using the BCG matrix, nowadays the B2C channel is considered the STAR, characterised by a high rate of market growth and a high market share. Here winelivery is very competitive and is able to face successfully attacks from rival firms. In the STAR business unit, winelivery must continue to invest in order to transform it in CASH COW. The B2B market, represented by the Horeca, is currently the QUESTION MARK: the market is characterised by a very high growth, but winelivery does not own a high market share. In this market winelivery must decide between a support or a disinvest strategy because it is a business that absorbs important financial resources. Also the third kind of business, represented by the selling of advertising to canteens, can be considered a QUESTION MARK: it currently works but they need to understand how much it will grow.
Winelivery is a very successful start-up with an increasingly profitable horizon ahead. Francesco and Andrea, the founders, were able to identify the potential of the market and exploit it, offering alcoholic beverages together with the delivery service. In a world where the technology plays a progressively major role, they are working thanks to an e-commerce platform and app.
Winelivery leverages on its ability to keep the drinks at the right temperature until they reach the customers and to deliver the products shortly after requested. Besides this, their marketing strategy allowed them to be strongly established in Milan, widely present in several main cities of the North of Italy and known in some European cities. The everyday dedication of the founders made it possible for winelivery to build a network of consumers to rely on.
Acknowledging its success in the B2C market, the start-up decided to enter the Horeca market, considering its capabilities valuable for the sector. It was offering to the hotels, restaurants and wine-bars high quality products at a competitive price, fast delivery until late evening and advices for clients concerning the selection of beverages. The acquisition of AVMilano, a Milanese wine distributor already operating in the Horeca market and having an established network of connoisseurs, allowed winelivery to use the potential of a widely known brand in the sector, to increase the service offered and make it more efficient and to share resources and capabilities, information and customer base.
As of today, winelivey aims at keeping investing in the B2C market, having high potential and increasing the market share in the B2B market, making it its core business. Born in 2015, in only 3 years, the Italian start-up managed to conquer the Milanese market (and not only), pricing on its first mover advantage and distinctive capabilities, and is now shifting its look to foreign countries, especially the British one with London.