The guys behind Wines Til Sold Out

April 20, 2012 12:56 pm - Posted by Tracy in Behind The Scenes, Drink

An email arrives from WTSO and you immediately begin to salivate. Perhaps your heartbeat races and your pulse quickens. Thankfully, this isn’t porn-related spam, but rather a doorway into a semi-secret world of seemingly unheard of wine discounts. At 30-70% off original retail pricing, these time-sensitive deals offer up incredible values on a wide range of wines from lower-priced, large production wines to some of the world’s priciest such as Napa Valley Cabernets, Brunello di Montalcino and Bugindian Pinot Noirs.

So just who is this WTSO that sends such great e-mails? Cracking the code, WTSO stands for Wines Til Sold Out, a members-only, flash sale wine site and the brainchild of Elliot Arking. Elliot seems to have appeared from nowhere if you believe his LinkedIn profile. This is somewhat true since Arking launched WTSO in 2006. However, it only tells part of the story. Arking’s full resume encompasses work with several successful companies, including the purchase of Roger Wilco Wine & Spirits, a retail wine shop in southern New Jersey, with his brother, Joseph Arking, in 1982.

His son Jamie’s profile is more complete, chronicling his career in research and development and strategic marketing after receiving a Ph.D. in molecular pathology and, later, an MBA in Finance. Jamie logged in time at healthcare and biotechnology companies, taking up residency in D.C. and then San Diego, among other places. Sounding more like a Wharton professor than wine salesman, Elliot explained that he told his son to “always be on the income side of the ledger.”

With his own 30 years of experience in brick-and-mortar wine sales, Elliot was uninterested in online retailing when his nephew (Joseph’s son) first suggested it. But, his aha moment came when he viewed an electronics website that sold only one product at a time. He thought the idea made sense and offered a great value proposition.

Adopting the same concept, Elliot and Joseph unveiled WTSO in the summer of 2006, building up its membership slowly, but steadily, over time and learning along the way. About four months after the initial debut, he tweaked one of the offers to include free shipping and noticed a big impact on sales. As a result, all orders now ship free of charge.

By 2008, WTSO had clearly become a serious venture, at which point Elliot began to nag Jamie to return to the east coast and join the family business. As Jamie tells it, “He told me to stop … (expletive implied) … around and get home.” So he did, taking on the role of WTSO’s Chief Financial Officer.

Jamie jokingly complains that he doesn’t get taken along on tasting trips, but claims that his palate isn’t as sophisticated as that of his father and Uncle Joe. Despite his mock indignation about being confined to spreadsheets and numbers, Jamie seems quite giddy with the way things have evolved; clearly proud of the company his family has created.

Today, WTSO employs 30 people and has over $70 million in annual sales. The website generates $52 million, with the balance coming from sales through their app and other social media. Although their mailing list is quite extensive, approximately 140,000 active members account for the majority of purchases, who continue to buy again and again.

Given the Arkings’ devotion to customer service, such repeat business is to be expected. What might be surprising is the level to which they will go to make their members happy. Along these lines, WTSO uniquely provides a money back guarantee; if the customer has a problem with a wine for any reason –even if s/he just doesn’t like it – they will receive a credit for that particular purchase. Similarly, in tracking customers’ comments on the site, they discovered that a member had identified a corked bottle several months earlier, but not reported it. Elliot immediately reached out and offered a refund, much to the astonishment of the member.

Rather than sharing their opinions, by design, wines are marketed with their respective press scores since Elliot prefers third party endorsement to add legitimacy to a wine’s quality. On rare occasions, if a wine has been purchased in sufficient quantity, it may show up on the site again and will also be accompanied by members’ ratings.

While some have been critical of the flash site phenomenon, arguing that the approach is unsustainable long term, the Arkings disagree. They feel that wine will always be available to be sold in their business model. Moreover, they stress the positive influence that their site has on individual wineries – offering an important distribution channel with high impact and high thru-put to the consumer, such as the sale of 1,000 bottles in a single hour on one occasion.

Elliot further emphasized that they buy in large quantities and pay right away and was quick to note that, upon purchase, they take delivery of all wines. Consequently, they have full control of the product (as well as the risk). This differs from some of the other flash sale sites that market on behalf of the winery, but don’t ever take possession of the products. This point of differentiation ensures that WTSO maintains the highest quality throughout the process, but also translates as good cash flow for the wineries which don’t make any money on inventory sitting in their cellars.

Additionally, Jamie suggested that they are helping smaller wineries find new customers that they wouldn’t otherwise find. As a follow up, he believes that their WTSO clients may ultimately become wine club members of a given winery, having been exposed to those wines through WTSO.

Looking ahead, Elliot admits that he takes a conservative view, begging the question, if it works, why change it, but does acknowledge the significant potential in growing their customer base. Accordingly, while there are no plans to add or alter the company’s activities, member acquisition remains a priority for the foreseeable future. All of which means that there might be a lot more people salivating over their inbox.

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