Club W Raises $9.5 Million To Appeal To Wine Lovers, Not Snobs

Sep 23, 2014

(WSJ) - Club W Inc. has raised $9.5 million to grow its e-commerce wine business in the U.S.

Bessemer Venture Partners led the investment. Earlier the Los Angeles startup raised $3.1 million in a seed round led by Crosscut Ventures.

The deal comes after efforts to sell wine by some traditional retailers and startups didn’t bear fruit as hoped.

Lot18, a New York-based online seller of fine wines, raised about $47 million in 2010 and 2011, but in the next two years, it laid off a significant portion of its staff, made a failed attempt to enter the European market, and has since been retooling its business.

It ditched the “flash sales” approach it was known for earlier, in which it sold bottles that were very highly prized and priced elsewhere at a discount to its members. It now sells wine and housewares as gifts or on a subscription basis.

Gilt Groupe Inc., a members-only shopping site, tried offering gourmet foods and wines online via its Gilt Taste division, which it shuttered after about two years.

In order to start selling online, noteworthy wine shops such as Zachys Wine & Liquor in Scarsdale, N.Y., or Plumpjack Wine & Spirits in San Francisco have had to navigate a maze of sales tax districts, rules and technology to sell their bottles across the U.S.

Although wine purchases and consumption are generally on the rise domestically, only 2% to 4% of sales happen online here, according to GuestMetrics, a hospitality-industry business intelligence firm.

Club W’s approach to selling online borrows, in a sense, from rising stars in other product categories, such as direct-to-consumer fashion brands Warby Parker, Bonobos and Everlane, and subscription-commerce brands including Birchbox, Harry’s and Julep in the bath and beauty category.


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