This post belongs to an ongoing series about the Naked MarketPlace, a website that allows any winemaker to pitch wines to the UK market
Another key aspect of the Naked MarketPlace is the timeframe in which winemakers have to sell their wine.
What is the timeframe?
By timeframe, I just mean the amount of time that a pitch remains on the site before it is determined to be successful or unsuccessful. The timeframe is clearly displayed on the Marketplace site with countdown clocks that tell you how many days, hours and minutes are left. And during the last day it goes down to hours minutes and seconds (see the photo above).
Timeframe simultaneously reflects the true economic urgency of wine sales and engenders a sense of urgnecy in the buyers. I’ll talk about this in more detail below.
Who controls timeframe?
The thing that might be surprising is that Naked Wines controls the timeframe. Every winemaker is given the same timeframe. At the application launch, winemakers were given seven days. As this seemed very short, it was raised to 21 days. The marketplace is still in beta, so it’s normal for tweaks like this and I do think that 21 days is an amelioration. As a sidenote, 3 weeks more closely resembles the “advanced booking” sysem which Naked employed before launching the marketplace.
Why have a timeframe?
I’ve got two good reasons.
- Clerical – just to keep clean
- Winemakers face time constraints
- Customers know it won’t last forever
From a simple clerical point of view, it’s important to set time limits. Without a time frame, the market would be cluttered with too many old unpopular pitches. So from that point of view, it’s good to be able to call it a day and archive pitches at a certain point. (Though I think the current system deletes unsuccessful pitches, another point which will be explored on another day).
Time limits create a sense of urgency. Rather, they reflect the sense of urgency that winemakers already experience. Time limits share that urgency with our clients.
The truth is winemakers dread stockpiling wine. Once wine is bottled, it takes up lots of space. That space has to be temperature and humidity controlled and it has to be somewhat accessible to the large trucks which will eventually pick up the wine for shipping (or at least accessible by a forklift which can then have a paved path to the trucks). Even before bottling, wine takes up a lot of space and keeping wine in bulk (tank or barrel) entails a greater number of lab tests and chances that the wine will encounter problems. And the undercurrent here is that there are bills to pay.
For these reasons, along with many others, most winemakers would rather sell their wine today than in two months. And the timeframe reflects this. If you put a wine on at a certain price (often discounted), you’re entitled to some conditions. Saying “x% off as long as you buy at least 100 cases in the next three weeks” is fair. It’s akin to saying “If you don’t buy this much in the next three weeks, that’s fine but you’ll have to pay the full price like everybody else.”
So that’s the urgency from the winemaker’s perspective. How does it reflect into the client’s perspective? Having a time limit creates a chance that they might miss out on the deal.
You see the big banner that proudly displays “This deal has now finished” and shows how much money customers saved by getting on in this deal. Anybody who missed it will feel regret and will be more likely to buy next time a deal this good comes up on the site.
How else does the time limit affect the marketplace?
As soon as we start talking about risk and reward, chances of missing out, opportunity costs, and so on, we’re entering the realm of game theory. I already alluded to this in a previous post, and I always hesitate to bring up this sort of complicated stuff… ultimately, you should not think this hard about the marketplace or any other website. Realistically, you should just go onto marketplace, see if any wine tickles your fancy, and bid on that wine based on what you actually think it’s worth to you. No games.
That said, there are some fun ways to analyze the system if you like thinking about this sort of thing. 🙂
One angel (that’s a registered member of Naked Wines) had this to say:
From the seller’s perspective, the stated 7 days for a sale creates a jeopardy with regards to volume sold and price point. If the minimum number of bids are not reached at the desired price point, the seller has the decision to lower the price, in response to the market, (which has happened on other sales).
If the sale duration is elastic, then essentially the ability to offer a lower rice is irrelevant, as the seller can extend the sale until they reach the minimum number of bids at at their desired price point. Ultimately this is not in favour of the buyer, and less fun!
I had bid at a lower price, and with a day to go returned to add a case or two more at a lower price, on the basis that if the minimum price order was not reached (it did not look like it would be at the time), the seller may lower the price, or fulfill the lower price orders also – but by adding another 14 days to the sale this aspect of the game dynamics was removed, and the base proposition of the market place was lost.
A shame, as it removes the fun, the opportunity for the buyer, and the gaming dynamics which move the market place beyond a straight volume based discount sale.
James 16:16 09/06/2011
?The elastic duration James refers to is that unique change from 7 days to 21 days that I mentioned above. But his post illustrates an important general point. A cemented time limit when the deal expires gives the winemaker an incentive to make the best deal possible in order to increase sales.
Similarly, as a successful deal reaches its expiration, customers who bid low are encouraged to raise their offer. For example, the Reserve did very well. By the end of the bidding period, we hardly had 20 cases left. Logically, there was no reason for me to lower the price significantly in order to sell 100 more cases. And it’s not even feasible since we only had 20 left to sell. So some of the lower offers bid up. And this shows the system works, even in these early days.
You see a similar sort of gamesmanship in the Dragon’s Den, a popular UK television program where entrepreneurs pitch their ideas to a panel of investors and ask for a certain minimum investment. The catch is that they must receive at least the full amount of money they asked for from the investors or they leave with nothing at all. Oftentimes, when a pitch has overestimated the value of the business, the pitcher will give up a more significant percentage of the company just to hit that minimum amount of pounds. On the other hand, when there’s a really good investment on the table, the investors fight over it and will offer more and more to get in on the deal.
Should the timeframe system change?
Incidentally, we should address James’ questions about whether it’s fair play to change the time limit. Firstly, I should point out that this change was exceptional. The duration won’t jump around willy nilly every time a winemaker fails a pitch. This is a rather unique historical situation where NW changed the duration because it was clear we needed a longer time period in the beta / early-adopter phase of the marketplace.
That said, maybe different deals should be able to have different deadlines. The same way ebay or kickstarter allow sellers or fundraisers to determine their own deadlines, MarketPlace could allow winemakers to set their own deadlines.
It would work because the urgency winemakers have to sell product quickly would motivate us to pick the shortest time possible. And this would be checked in the other direction by the minimum amount of time necessary to drum up support for a wine. Again, ebay and kickstarter are good examples. Very few people put auctions up on ebay that end two years from now. They’re selling stuff and they’d rather sell it this week if possible. All that said, I’d probably pick about 3-4 weeks every time. 😀 So maybe it’s fine with Naked picking the time limit for us.
But then there are some wines on the site that just didn’t work out. The brilliant effort of Disrupt, a wine blended between three different countries, is an example of something brilliant that just couldn’t find enough support within three weeks. These three winemakers basically agreed to ship their wines to a central point for blending on the condition that they sold something like 600 cases. Now, this is a big number for a wine that virtually no members of the site have ever tasted. So it couldn’t rely on existing NW clients. Instead, they needed to spread the word amongst their own UK networks, get UK press talking about it, etc.
Again, the similarities to kickstarter are striking. For those who don’t know, Kickstarter is a fundraising platform. You put up a project that you’d like to have financed and then you send the link around to all your friends and the Internet and you hope enough people share your passion enough to donate and get your project funded. And then Kickstarter grabs a commission. Really, this Disrupt wine could have been a kickstarter project. And a key element of this model is that it takes time to spread the word and get buzz going. Maybe Harpers is willing to write a piece on the Disrupt wine, but they’re not doing it within 21 days of the pitch being announced. They’re monthly and have paper deadlines. So it would have behooved that project to pick a longer time frame like 60 or 90 days (not uncommon on kickstarter).
On the other hand you don’t want deals languishing on the site. And some flash sale businesses online really benefit from much shorter time spans. Weekly sales like woot.com or daily sales like a whole host of American sites.
One last note: even if it is up to Naked Wines to pick the deadline, maybe they should shift over time (and not in the middle of any ongoing bids) to shorter times as the website population grows. Today, we’re basically pitching to the customers who are already registered on Naked. But if this gets a lot of press attention, you might see people joining Naked Wines for the sole purpose of shopping in the marketplace. For example, I have English winemaking friends who complain that they can’t even sell wine to their own family back home. Well now they can clear it through Naked Wines. Just put up a pitch and email the link to your friends and family. If a lot of winemakers start doing things like that, the marketplace population grows and grows. One day, it could dwarf Naked’s conventional import/retail aspect. And in that case, we could drop the deadline significantly.
Elin McCoy wrote her Bloomberg column about my UK importer Naked Wines, and her article uses a lot of my personal experiences with the company.
It’s a bit strange referring to Naked Wines as a wine importer. The more I work with them, the more I realize they have many many roles in the wine trade. Calling them a wine importer almost feels like I’m neglecting their role as retailers, financers, communicators, and innovators. Some of the projects described in Elin’s article like the MarketPlace can’t be classified as a traditional ecommerce site. Naked isn’t buying wine and then selling it. They’re instead providing a platform where other people can sell their products like eBay or GroupOn. If this project succeeds and draws enough attention, it could totally marginalize the import and retail side of the business.
Anyway, it’s always fun talking to journalists about Naked Wines because they’re constantly trying new things. So every interview, there’s a slough of new questions and answers. I never get bored! 😀
I met Elin last October at the European Wine Bloggers’ Conference and she got to taste some of my wines back then.
She had this section in her article about O’Vineyards:
Joe, Ryan, and Liz O’Connell at their winery Domaine O’ Vineyards in Cabardes, France. The O’Connells, from Florida, purchased the vineyard in 2004, and their cabernet-merlot blend Trah Lah Lah has won fans among Naked Wines’ Angels. Source: O’Vineyards via Bloomberg