Nakedwines. Com Case Summary

Problem/Issue: NakedWines.com (NWC) is a global wine corporation that funds winemakers, who then produce wines on consignment with NWC that then get sold directly to consumers via the Internet. NWC has grown exponentially since their founding in 2008 (+$95,679,370 in net sales) but they now face issues with both attracting and retaining customers.
Porter’s Five Forces: The competition surrounding NWC is intense. Of the 7,498 wineries in the United States only three, Gallo, The Wine Group, and Constellation account for over 50 percent of the production (Exhibit 1 in appendix). Some of the major online competitors include Laithwaites, Wine.com, Lot 18 and Amazon. While these are considered competitors, Rowan Gormley (CEO of NWC) said, “I

With that being said, they didn’t get to this point without having certain strengths. Three of their strengths include being a low-cost provider, enabling small winemakers through crowd funding and providing a high-quality product demanded by the market. First, NWC is able to provide their wine at a low-cost due to the lack of distributors and wholesalers eating up profits (Reference Exhibit 2). Second, through crowd funding, NWC has put together one of the largest groups of Internet-wine investors who care more about the wine than the brand. This community of investors can sometimes be viewed as philanthropic due to investing in smaller enterprises. In all reality though, these investors expect a high-quality wine that sometimes only smaller winemakers can provide through diligence and attention to detail. Which brings up our last strength, high quality. NWC only funds the best winemakers who lack the capabilities of producing large amounts of wine. For example, according to Roman Gormley, “In Argentina, we put $100,000 on the table and invited 500 winemakers to submit their wines for reviewing.” (Case) NWC then let their Archangels (devoted and highly active online customers) choose the

Three of their weaknesses include brand awareness, customer retention and production capabilities. First, as a new company NWC struggles finding new customers due to their brand awareness. With the absence of distributors and wholesalers promoting their product, they have to rely on word of mouth and online social media marketing to attract customers. Second, once they have customers, retaining them has proven to be difficult. NWC has found that customers who aren’t engaged in the reviewing and commenting section of their website tend to leave. Lastly, NWC has some problems with being able to produce the amount of wine demanded. Some of their smallest winemakers only make about 400 bottles per year. If 20,000 bottles are demanded of that wine, there will be a lot of disgruntled customers due to the lack of