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Published 28 April 2011 05:01, Updated 03 May 2011 16:52
Andrew Dal Broi had 12 hours to start Winegrowers Direct and the clock was ticking.
After being told by NSW liquor licensing officials late on a Friday afternoon he would be fined $100,000 if he proceeded with a plan to sell wine from a warehouse the following morning, he needed a strategy. He had already paid for $25,000 in advertising, which would be wasted unless he could build a new business overnight.
The week leading up to Dal Broi’s make-or-break moment had been a great success. After having had a bad experience buying a winery in 2007, Dal Broi decided to start a business that would help other growers avoid some of the difficulties he had experienced. After meeting a fashion distributor in Melbourne, Dal Broi suggested they go into business together selling wine and clothing at a warehouse. The plan was to bypass the traditional retail structures (and their price mark-ups) for the benefit of suppliers and consumers. They found a suitable site close to the centre of Sydney in Alexandria and invested heavily on television and radio advertising. By the time they opened the doors at 10.30am on a Saturday in February 2009, the queue stretched for 2½ blocks. Dal Broi knew he was on a winner.
On the first day, they took $58,000 and almost as much on Sunday ($51,000). About 70 per cent of the sales were from wine and the remainder clothing. By Monday afternoon, business had slowed but they still took $32,000. Dal Broi says that sourcing wine direct from growers meant he could make a 40 per cent profit margin and still be cheaper than big retailers such as Dan Murphy’s and First Choice.
The consumer appetite for his business model was clear and Dal Broi decided to invest a similar amount on advertising for the following weekend. Having committed the money and finalised plans for the next big rush of customers, Dal Broi’s business ground to halt.
The decision he made next was life-changing. He decided to end his venture with the fashion distributor and create a web-based wine sales company. The only problem was that he didn’t have a website and the new business had to be operational by the following morning.
The first step was to change the booked advertisements so that instead of referring customers to the warehouse, they would be referred to a website, which didn’t yet exist. He then called a web development company and offered it $3500 to build a web site overnight, which it did.
Dal Broi also needed a call centre. His solution was to buy six prepaid mobile phones and recruit six backpackers from a local hostel.
This is not a typical corporate story and what happens next is a lesson for anyone who thinks there are strict recipes for success in business.
Not long after the sun rose on the following morning, the website got its first hit. Then the phones started ringing and kept ringing for about an hour before abruptly stopping. The phones had run out of credit, requiring Dal Broi to make a mad rush to the Telstra shop. Soon after, his makeshift call centre was back up and running and orders flowed in.
Winegrowers Direct took $40,000 in orders on the first day of operation and $280,000 in its first two weeks. “We knew we had found a solution that could cut out the margin that other retailers have to make,” Dal Broi says.
In its first year of operation, Winegrowers Direct turned over $2.2 million and is on target for $7 million in sales this financial year. It’s a growth trajectory that has seen the wine retailer debut at 51st place in this year’s BRW Fast Starters.
A recent capital raising values the business at $11 million. It has 12,000 active members who spend, on average, between $1200 and $1500 on wine each year.
Dal Broi says the website is being upgraded and will be relaunched soon. The plan is to build the database to 200,000 members. An unlikely internet entrepreneur, the 38-year-old says the company he had 12 hours to start can continue to grow quickly. “Winemakers need cash flow more than anything and we can provide it,” he says.