About Face.

An online wine seller chucks e-commerce to be a middleman.

CUSTOMER SATISFACTION IS SOMETHING DOMINGO DELFINO, CEO and founder of Venezuela's Vinos.com, says he is emphatic about. So he gave up.

After 18 months of headaches trying to fulfill the promise of three-day delivery to online wine buyers in four countries, he's burned out--despite reporting US$40,000 monthly profit on $60,000 in sales. Retail over the Internet is tough, Delfino says, and the region's economies are not quite ready to support it.

Success beckoned, but problems were never ending at Vinos. Delfino grappled with payments, banks and credit cards, logistical nightmares, suppliers all over the globe and, to top things off, faulty phone lines. "We saw how difficult B2C is," Delfino says.

A former Seagram's executive who also runs his own liquor distributorship, Delfino is dumping a potential winning hand for a longer-term strategy: build the already-popular Vinos name into a vertical industry portal, then sell e-commerce services to the bricks-and-mortar wine vendors with whom he used to compete.

Vinos will keep its own identity as a storehouse of information about wines and spirits. But the site will now host links to the Web site of any company involved in the liquor industry, including retailers, distributors, importers, producers, brand representatives--even restaurants and tasting clubs. The aim is to build communities around each client's Web site, which will be chock full of company news, special offers, new products and, alongside that, e-commerce.

Vinos will design and manage the Web sites, charging an upfront fee of $3,000 to $5,000, including e-commerce features, and a $200 monthly maintenance fee. Despite running in the black, Delfino believes expansion will be easier and cheaper if he becomes an Internet gateway for brick-and-mortar companies. "We're going to be commercial facilitators of the trade," he says.

Vinos is backed by a pool of investors including venture capital funds, companies like Chile's Valdivieso winery and individuals. It plans to start hosting 12 clients in each country, swell to 300 within a year and 1,300 in three years. Expansion to Mexico and the Dominican Republic is next.

Change of course. With those client numbers, Delfino calculates $250,000 in profits in 2001 and $1.5 million by the third year. The reengineering of the site has cost about $450,000.

Delfino is banking on Vinos' strong reputation in Venezuela, Brazil, Argentina and Chile. A hit among wine enthusiasts and industry people, Vinos gets 12,000 visits a month in Venezuela and 30,000 a month in Brazil--traffic it parlays into real-life wine events, such as tastings and courses, for which it takes reservations online only.

Its customer service has won accolades. A top Caracas business school, the Institute for Advanced Administration Studies, profiled Vinos for a how-to book on customer satisfaction, says John Ireland, coordinator of the institute's marketing center.

Most importantly, the start-up makes money. "Vinos was one of the first Venezuelan dot-coms that successfully went international," says Lorenzo Lara Carrero, president of Venezuela's e-commerce chamber. "It's been an important contributor to the development of e-commerce in Venezuela."

With the revamping, expensive infrastructure will be eliminated in each country. Delfino figures there are 30,000 liquor industry related companies in Latin America. He reckons, too, that the model can be applied to any product with status-oriented marketing. "The idea is to create your own fan club around the Web site," he says.

Key to the project will be keeping Vinos' current fans loyal to the new site, and making sure each client's Web site can handle merchandise returns. But Delfino is confident this model will work smoother than its previous incarnation as a retail effort, and he can finally put away the aspirin bottle. "These past 18 months have been a learning experience," he says. "We saw better business opportunities."