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The Making of a 'Personalized' Online Wine Merchant

Club W, now known as Winc, was launched to provide online consumers with a curated source of fine wines on a subscription basis. But rapid growth was challenging the company's ability to fill orders accurately and efficiently.

The Making of a 'Personalized' Online Wine Merchant

For retailers looking to satisfy demanding e-commerce customers, personalization is an essential element of success. That maxim holds especially true in the highly competitive world of gourmet foods and wine.

The founders of Club W wanted to give online wine buyers the same degree of attention they might receive from a sommelier at a fine restaurant. Four and a half years ago, they launched a venture built around a subscription model, supplying wines that were geared toward customers’ individual tastes.

After about two years, the company moved from selling existing wines at a markup to producing its own varietals, in partnership with vineyards from around the world. The approach, coupled with the use of a “palate profiler,” further cemented their ties with subscribers and created a unique brand in a crowded market.

To make the business model work, Club W would need to operate a highly efficient logistics network. It couldn’t go on shipping product out of a garage, as it had in the company’s early days. So it began relying on the distribution expertise of a third-party logistics provider in Northern California.

That strategy proved inadequate as Club W’s business continued to grow. It opened its own warehouse in Napa, Calif., run by the 3PL’s homegrown warehouse-management system (WMS) software. Located several hundred miles from Club W’s Los Angeles-based headquarters, the facility soon found itself unable to keep pace with monthly volumes, which went from 3,000 to nearly 15,000 orders within just nine months.

For its next move, Club W looked southward, establishing a fulfillment center in Santa Maria, Calif. At the time, its 16,000 square feet of warehouse space could handle around 200 SKUs and up to 1,500 orders per day. But the company also needed a WMS that could manage such volumes efficiently. The old, paper-based system was plagued by inaccuracies in inventory and order fulfillment.

Among its other shortcomings, the legacy WMS lacked connectivity back to headquarters. The gap created the possibility of dead stock. What’s more, training workers on a pick-pack system that relied on paper was “arduous,” says vice president of operations Kjiel Carlson. “It doubled our labor.” The company needed a system that provided 100-percent accuracy of inventory, along with a precise record of what was shipped.

Club W did a thorough review of WMS vendors, large and small. Chief among its requirements was a system that resided in the cloud, obviating the need for an expensive license and on-site implementation of the software.

A Vendor Selected

In the end, Club W settled on a WMS from Snapfulfil, which was offering its application in the cloud on a subscription basis. The vendor promised rapid implementation and return on the customer’s investment.

While Snapfulfil didn’t have another user in the alcoholic beverage business, it saw the arrangement as “a great fit,” says Kirk Anderson, executive vice president of sales. It had installed systems at numerous food and beverage companies in the U.S. and Europe, with similar shipping requirements.

Snapfulfil was well versed in the first-in, first-out (FIFO) fulfillment strategy favored by Carlson. The two companies also worked to redesign the facility’s pick-pack layout in order to nearly quadruple volume within the existing space. That action allowed Club W to extend the life of the Santa Maria warehouse, even as orders continued to grow. As a result, says Anderson, “they saved a lot in leasing and operational cost.”

Reconfiguration of the building was a necessary step in adopting the new application. Carlson describes the experience as transitioning from “a system built for 1980 to one for 2025.” No longer did a warehouse worker need to wake up at dawn and print out a series of paper pack slips for the day. The resulting efficiencies were in line with the company’s expanding sales.

Carlson adds that the Snapfulfil WMS interfaced easily with Club W’s homegrown applications for order management, as well as packaged, cloud-based systems for transportation management and enterprise resource planning.

Carlson lauds the Snapfulfil system for its “speed of ownership.” Workers were able to adapt to the software quickly, with expert teams, both remote and onside, ensuring a smooth transition.

The Testing Phase

Anderson says Snapfulfil allowed Club W to “play” with the WMS for a couple of weeks, during which time the vendor participated in full training and configured the system to meet the user’s unique needs. “Every customer has its own version of the software,” he says. “It’s not a bulk system.”

The Club W team ran a marketing campaign, unplanned with operations, during the first week of go-live. “I didn’t know what was going to happen,” Carlson recalls. “I was expecting 800 orders on Tuesday. I walked in that morning and there were 1,600 orders based on the promo.” The exercise went smoothly.

Implementation of the new WMS boosted Club W’s order accuracy rate from 96 to 99.9 percent, largely because the merchant is able to do an active scan on every bottle of wine before it goes in the box. Despite the quadrupling of growth and seasonal variations in demand, Club W has yet to miss the requirements of a service-level agreement. Meanwhile, the average training time for new workers has shrunk from a week to just four hours.

As Club W has expanded its range of offerings, dead stock has “plummeted,” Carlson says. Currently there’s no inventory that has been in the building for more than six months. And the company can trust the system to give an accurate picture of stock on hand.

Further growth in sales is virtually assured. Recently the company began shipping packages directly to consumers out of a warehouse in Philadelphia, where a third-party logistics provider had previously handled the business. The Snapfulfil WMS is up and running at that location as well.

At the same time, Club W has begun selling its wines to retailers and restaurants, and recently changed its name to Winc. Carlson says the new brand is in line with the company’s broader scope of operations and customer base.

It all starts, though, with efficient warehousing and distribution. Says Carlson: “We couldn’t do what we’re doing without Snapfulfil.”

Resource Links:
Winc
Snapfulfil

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