Fine wines a winning game online at Underground Cellar
Underground Cellar is making a game of getting more than you asked for when it comes to great wine - by Punit Paranjpe
Startup founder Jeffrey Shaw playfully described it as "wine roulette," only you can't lose and the payout is cabernet sauvignon, merlot, chardonnay or other varietals crafted by renowned vineyards.
"I was a technology guy; I sort of fell into wine," Shaw said while exploring undergroundcellar.com on an iPad.
Shaw was in college in Arizona when he helped create a company specializing in secure photo identification badges for employees.
Not long after he graduated, the company was bought. He decided his next business would involve something he is passionate about, and wine fit that bill.
"I had some money and time and was really getting into wine," said Shaw, who recently moved to San Francisco, where his latest venture is based.
Shaw discovered that wineries often produce more than they can sell but risk being tarnished as discount brands and irking regular distribution partners if they let surpluses be snapped up by the highest bidders.
"We developed a way to help wineries quickly move wine without discounts," Shaw told AFP.
"We are making high-end wines objects of desire, and it never comes across like the winery is trying to dump the wine."
- Betting on upgrades -
UndergroundCellar.com made alliances with vintners in premier wine regions such as Napa and Sonoma in Northern California to feature vintages at the website.
Underground Cellar "gamifies" shopping so that buyers often wind up with portions of their orders upgraded to better bottles than they initially purchased.
For example, ordering a 750-milliliter bottle of wine priced at $30 could result in being sent, instead, a magnum of a reserve vintage at no extra cost.
The odds of getting upgraded are displayed as people peruse wines at the website.
"You always get at least what you pay for," Shaw said.
Wine upgrades can include bottles autographed by wine makers, rare vintages or larger bottles.
When Underground Cellar tested its formula late last year, its inventory of 2,000 bottles sold out in three hours.
The website racked up about $200,000 in wine sales by the time it ended a test phase in March.
"We can move 30 to 40 cases a day, because people are wanting the Jeroboam or magnum," Shaw said.
"It is almost as if we turned it into a slot machine. We will see them spend 50 bucks and then minutes later spend 50 more bucks."
- Boomers and Millennials -
The service squarely targets baby boomers, those born in the post-World War II era and seen as its "bread-and-butter" for now.
But it is courting millennials, a budding generation of wine aficionados born from the early 1980s to the early 2000s.
For example, while baby boomers respond to ratings by wine critics, millennials shun such rankings but are drawn to online stories or videos about winery life, according to Shaw.
Underground Cellar has a team of 13 people, among them an inventor behind modern-day podcasting.
Underground Cellar gets 20 percent of every wine sale, and another $3 per bottle sold.
The arrangement works out for wineries because it eliminates middle-men typically involved in distribution chains and provides online exposure for labels, according to Shaw.
The startup also built a "Cloud Cellar" service that lets buyers have their purchases kept safe in a Napa wine storage facility and even qualify for free shipping.