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Jeffrey Shaw, 34, wants to change the wine selling game.
His roughly five-year-old Bay Area e-commerce platform for wine, Underground Cellar, saw sales shoot up 1,000% in the past 18 months, as the pandemic sent many wineries scrambling for ways to sell directly to customers.
But rather than sling wine at a discount to spur sales, potentially a gut-punch to winemakers, Shaw sees a big future in his “gamification” concept for selling bottles on the internet.
“The world is changing,” Shaw said in an interview with MarketWatch, on the heels of selling the platform’s first million bottles and securing $12.5 million of Series A funding to expand. “What might have worked 10 years ago is radically changing.”
By that, he means not only giving customers a less intimidating place to buy wine, even rare vintages that can fetch $1,200 a pop, but also by turning it into a game, with some bottles upgraded at no extra cost.
It works like this: if a customer picks out six bottles at $30 each, half could be upgraded to bottles that fetch $50 or more.
The idea is to help U.S.-based buyers learn more about all types of wines, at whatever starting price, but also to introduce them to more expensive bottles, far-flung vineyards and wines produced by smaller, family-run operations that customers might not otherwise hear about.
“Our users are not just wine drinkers but collectors,” said Shaw, Underground Cellar’s founder and chief executive. Beyond its continuing effort to educate clients about wine, by next year the platform also expects offer customers a way to start trading bottles with other customers, “much like Robinhood” for managing a stocks
SPX,
portfolio.
Storage, and moving
To up its game, Underground Cellar also now offers to store wine for its customers, up to 500 per user, in its roughly 33,000-square-foot climate-controlled cellar near the Napa County, Calif. airport, which also sits near to the state’s famous Napa Valley and Sonoma winemaking regions.
Customers can click on their inventory and request free ground shipping from their holdings to nearly every U.S. state.
That all might sound easy, but it hasn’t been an entirely smooth path for Underground Cellar as it sought inroads into the clubby and, at times elite, $70 billion U.S. wine market. Three years ago, a 3-litre bottle of 1945 French Burgundy fetched in a record $558,000 price through auction house Sotheby’s.
Underground Cellar has gotten a boost from the pandemic, as U.S. wine consumption suddenly surged during the initial lockdown phase, but also led more people to try shopping for wine online. It also changed the tune of some previously skittish wine producers about giving digital sales a try, after orders from restaurants, resorts and cruise lines dried up.
“Some of the best wineries and winemakers wouldn’t respond to us two years ago,” Shaw said. “Now they are coming with tail between their legs, saying: we’d love to chat.”
“We are happy to welcome them in with open arms,” Shaw said, adding that his platform is open to wines made all over the world, regardless of size, with the ability to order as few as 2 pallets, or about 112 cases, from a single producer.
“We only have one criterion. That is, a winery has to make an amazing bottle of wine.”
