This post is in partnership with Worldcrunch, a new global-news site that
translates stories of note in foreign languages into English. The article
below was originally published in Economic
Observer.
Yuan Jiang started his first business, a direct marketing services provider
called Roadway, in 2001. Seven years later, Roadway ranked first in its
sector in China, with profits twice that of its nearest rival. At that
moment, Yuan agreed to a merger with the American firm D&B for more than $40 million.
It was 2008, when the financial crisis occurred. There wasnt much hope for
my company to be listed, Yuan says. Yuan Jiang thought it best to use his experience with Roadway to go into B2C
commerce. But he still needed to pick a product.
After flirting with several ideas, Yuan decided on wine mostly because of
its high profit margin. In China, a bottle of French or Italian wine that
costs 3 euros from a European winery will be sold for about 11 euros retail.
And in a restaurant or bar it can go for three to four times higher.
I had some competitors in 2008. But the crucial point is that wine was
small change compared to other consumer items. A lot of middle class
families had already started to drink wine, but not yet in way where it had
become a fixed part of their expenses.
Yuan did some simple calculations, and decided the numbers were right for
him to jump in headfirst. He was most definitely on to something. Through
his 4 million-member website, yesmywine.com, Yuan enjoys average sales of
10,000 bottles per day.
The real challenge, as with all B2C commerce, is figuring out how to deliver
the product. With wine its more challenging still. Big distribution
companies are not interested in delivering wine. Its heavy and fragile, so
we are obliged to use small companies. Still, breakages are inevitable.
After improving the packaging six times, yesmywine has been able to reduce
the breakage rate to less than 2%.
How to keep your clients? A social solution
Yuan Jiang is now working on building up his own distribution system to
guarantee the quality of his wine. He also already established his own
delivery service for the central Shanghai area. His delivery truck is
equipped and air-conditioned like a wine cellar to guarantee the wines
quality and taste. Starting in August, his team in Beijing will follow suit,
then Shenzhen and Guangzhou. Hed eventually like to cover the entire
Chinese market with his own distribution system.
And why should a customer come to me at all if he can buy his wine anywhere
else? What else can I provide to my customer apart from being cheaper?
Until last year, this was the one question that haunted Yuan how to keep
his clients faithful.
The answer to that question came in the form of a microblog, called My
Cellar, which Yuan embedded into his website. Visitors can open their own
accounts to the blog and thus display their wine cellars and share their
appreciation of wine with other connoisseurs. As a result, Yuan has
developed not only a large customer base, but also a faithful wine-loving
community.
