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RETAILING WINE ONLINE.

I RECENTLY SAT DOWN with Joe Arking, owner of two of New Jersey's larger wine and spirit stores, and the internet wine flash-sale site, Winestilsoldout (WTSO.com). Joe and his late brother Elliot have been in the alcohol beverage industry for more than 35 years.

Jonathan H. Newman: How did you first get involved in the alcohol beverage industry?

Joe Arking: In 1985, my brother Elliot and I purchased Roger Wilco Liquors, a three-store chain in southern New Jersey. We were in food businesses at the time, and the wine-and-spirit business appeared to have the stability and longevity we looked for.

JHN: What was the genesis of Winestilsoldout?

JA: Fourteen years ago, the wine business was in a general slump. There was a tremendous oversupply of wine at the winery and distribution levels. We built a huge close-out wine department, doing over a million a year in sales. One of our competitors at the time, The Wine Library, had built a huge direct-to-consumer internet business. We looked at shipping wine, but without a shipper to confirm age requirements, we were hesitant. Then came the U.S. Supreme Court's decision in Granholm, and we saw opportunity.

My son Edward told us about a successful electronics website WOOT, and we modeled our business on a one-wine-featured-at-a-time model. We wrote software and developed the website. We found that free freight was the key to successful consumer sales. My sister in-law Cris is a successful New York bond trader, and she emailed her clients and friends and told them about the website--and that got us going.

JHN: What was business like in the first few years?

JA: In year one we did about a million in sales. My brother and I were elated. That was an extra million in sales we didn't have the year before. In year two, we grew to over two million in sales. We didn't have debt and our small margins were fine--it was additional revenue we had not had before. We kept thinking we might hit a wall, but the business just kept on growing.

We understood from the beginning that customer service was the key to success. We guaranteed every bottle, no matter the reason, and refunded each and every member if they were unhappy. We kept morphing the business into something much bigger than what either of us expected. Changes to sourcing and the distribution model were key to purchasing on a much greater scale. The better the wines we offered, the more we grew. We had superior sourcing, and brought in some sensational wines that really got our customers excited. Our timing was ideal, and we invested the money back into marketing. I'm a merchant at heart, and I can't sit still for a minute. My brother and I worked our tails off and it really started clicking.

JHN: How did WTSO grow?

JA: We really did start with nothing, and now almost 15 years later have sold more than 45 million bottles of wine. We consistently reinvest in our business model. A lot of time and energy has gone into compliance and customer service. Due to changes in state laws, we lost a significant amount of business in 2016 and 2017, but having the lost states back in the fold, we are seeing nice year-over-year double-digit growth. The website will get a facelift this September. We will emphasize new ways to enhance the shopping experience. It will continue to focus on one wine at a time, with five offerings. We built a team of people over the years that are the best I have ever seen in my history in business, and there is no way we would be here today without them. I am proud of our organization and our growth.

As chairman of the Pennsylvania Liquor Control Board, Jonathan Newman was once the nations largest wine buyer. Follow him on Twitter at @Newman Wine and visit his website: newmanwine.com.
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Title Annotation:Wine business: Notes from a wine inside
Author:Newman, Jonathan H.
Publication:Beverage Dynamics
Article Type:Interview
Date:Jul 1, 2019
Words:657
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