Interview: Oddbins shows thirst for online growth

Drinks retailer Oddbins is focusing on its eCommerce offering to help drive sales growth over the next few years, with click & collect expected to be launched in 2015 and mobile apps potentially in the pipeline.

Under the ownership of European Food Brokers, which took over the business after it fell into administration in 2011, the 42-store chain is keen to build its property portfolio to over 100 shops in the coming years, but eCommerce manager Tony Duffy sees online retail as a core revenue generator.

Duffy told Essential Retail that since relaunching a transactional website in the summer of 2013, Oddbins has been working on reflecting the "irreverent and personable" tone – evident within its stores and marketing material – in its digital operations.

The company's financial year is coming to an end next week, with the final quarter seeing online revenue growth of 50% compared to one year before. As a fledgling online business this growth is coming from a low base level, but Duffy sees significant potential in this area of the business.

"We are looking at online sales to drive growth over the next two or three years," he explained.

"While we're expanding the estate we understand that the opportunity for aggressive growth in bricks and mortar is limited, so we're looking at eCommerce."

Apps are being evaluated as a possible addition to the company's digital arsenal, but developing website usability and an online voice are arguably higher up on Duffy's agenda at present.

He noted: "One of the things we're keen to bring online is an element of personality to our website. If you go into our branches we have brilliant customer service and we have knowledgeable staff. I hope we don't lose that as we grow online."

Duffy acknowledges the current website, which includes an infrequently updated blog and a clip of its recent Christmas marketing campaign, is "perhaps a bit too 2D" and there are plans to make the site more interactive through the use of video and educational material "that is still relevant to the customer".

Oddbins has a long history on the UK high street, having first been established in 1963. But as supermarkets gained more share of consumers' wine and drinks spend, the business fell on hard times resulting in its collapse at the turn of the decade. As the retailer looks to increase its brand awareness and grow again in its new guise, it wants to differentiate itself from the mass market wine sellers.

Managing director Ayo Akintola has been keen to avoid heavy discounting, which led to some of the problems encountered under previous management, and he has helped foster an aura of wine expertise among staff in its stores that he believes can't be replicated in supermarkets. In-store tastings and an alternative marketing strategy also help build a unique brand, which Akintola feels appeals to its existing customers.

"We need to be a little bit more creative and think about what our particular customers are searching for," said Duffy.

"It all comes down to understanding how individuals interact with us. The interaction needs to reflect individual shopping behaviours.

"Our marketing – with the customer base we have – is creating incredibly strong relationships, but the flip side is that maybe we're not as accessible to floating consumers or people who haven't yet encountered us. There are probably large chunks of society who used to have an Oddbins in their town or city and haven't seen the brand for a few years and they're probably not aware that we are in business."

At present, the vast majority of Oddbins stores are located in London and the Scottish cities, so opening new shops around the UK, as is planned, will help boost the company's profile. However, its visibility online, through social media and search engines, will be equally important in raising awareness of the retailer's offering.

A major development in its eCommerce strategy saw the business start a partnership with cloud hosting provider Rackspace late last year, after problems with a previous supplier meant its website struggled to deal with peak traffic. The issue raised its head after a national marketing campaign directed customers to its website but hosting reliability issues resulted in the retailer missing out on a significant number of sales.

Duffy said that the move to cloud hosting with Rackspace was "a risk" coming, as it did, so late in the year and close to the busy Christmas season, but he believes the gamble paid off.

"It was later in the day than usual in terms of planning for these things, but the switch of supplier reaped dividends," he argued.

"I've only seen one wine retailer that had a better Christmas than us in terms of growth. We had 100% reliability and I know the conversion we experienced this Christmas, which was up on last year, is largely because of this reliability.

"Having the option of being cloud-based is obviously ideal because so much of our traffic comes in that final quarter of the year. We're very pleased and the service is absolutely outstanding."

If ensuring a website can deal with peak traffic is a prerequisite for modern retailing, then the next level is arguably the creation of a multichannel business that serves consumers seamlessly online and offline, and understands how its customers shop in each channel.

Duffy is aware that Oddbins is only at the start of that particular journey, although the business is growing its potential online customer base by running in-store wine tasting competitions that require people to supply email addresses. The number of participants in 2014 doubled year on year to more than 20,000.

Commenting on various ways customers now shop for wine, he added: "At Christmas we found that because website navigation has improved and simplified, people after a wine gift found the purchase journey simple.

"Regular users who spend a lot longer on the site actually don't convert as well, which is an interesting proposition. I don't know yet why that is happening; I'm inclined to think they are people who are using Oddbins shops to complete their purchases but are doing their information gathering and comparing online."

Finding the solution to this conundrum is high up the list of priorities for many high street retailers, as they look to use the data they have generated over the years to personalise the shopping experience for their customers and better understand individual behaviours.

"From my point of view, there seems to be a big gap between where retailers are and the capabilities of the software that is out there," Duffy noted.

"I would suggest that the gap is because we have such complex, highly connected consumers and retailers haven't really figured out data in a layered way."

By this time next year, Duffy hopes Oddbins will occupy a more prominent space in UK shoppers' psyches and he would expect click & collect to be in operation, as the company's burgeoning online retailing site continues to grow as a revenue generator. Intriguingly, he also expects the business to have evolved "in a way that offers more than a conventional wine business would be expected to".

Like many of the bottles purchased and drunk from Oddbins stores over the recent festive trading period, the eCommerce manager has whet consumers' appetites for the year ahead.

Click below for more information: