Splash is a U.S. direct-to-consumer wine marketer focused on cutting through the clutter of a growing, yet confusing market. Splash provides members with transparent pricing, great value, and top quality customer service. The best part? It's working. Splash has realized early stage profitability.
Why did you start Splash Wines in 2015?
We launched Splash because, while there has been a proliferation of companies in the direct-to-consumer wine space in recent years, nobody was taking care of the basics: providing great values and excellent customer service. Consumers love the concept of wines delivered to their door but were getting turned off by tactics that were not transparent and did not engender trust. Our goal is always to do what it takes to earn the trust of our customer.
How does Splash Wines’ business model differ from other wine companies like Naked Wines in the UK?
Splash starts with generational relationships with quality wineries around the world, which means we can quickly adapt to meet consumer trends. Most first-time customers come to us via one of our “wine in the glass” acquisition strategies and, following a period of complimentary membership, which means access to our pricing and free shipping on every order, paid membership costs $60 per year. Our focus is on providing customers with great values and transparent pricing, which gains us a level of trust. When they realize we mean it when we say they will never pay for a wine that doesn’t meet their own high expectations, they don’t have a reason to go anywhere else.
How has your business grown over the last 3 years?
In the last three years we launched the business and reached $4.1M in 2015 revenues. We were profitable after 10 months (October 2015) and have been profitable every month since. In 2017, we achieved over $8.0M in revenues, and Q1 2018 was our best first quarter in history with sales for the period over $2.1M, and profits running 139% ahead of the same period in 2017. We have established a solid customer base of 60,000, but that is just the start. While the market is white hot, we are not content with growth that represents just “getting our share”. Instead, we are aggressively expanding our acquisition program and executing partnership agreements with major players like Staples, that will mean accelerated exposure across a broad population, while still controlling our costs to ensure continued profit. We are excited by what we have achieved to date, but we also know that we are just beginning - the best is yet to come.
What does the US market landscape look like?
The US is the largest wine market in the world and the direct to consumer space, which didn’t exist a few years ago, is now 10% of the market with over $2.5 billion in sales in 2017. The future looks bright, as millennials are already the largest wine consuming generation. This bodes well because they are going to be around a long time, and are very comfortable buying anything online. At this point the market is fractured, with no clear leader. Most companies in our space are focused on acquiring customers at almost any cost and then, when they have them, their path to profitability is skimping on quality and customer service, which drives the customers away. The Splash model, focusing on customer retention (the best customer you can acquire is the one you already have) and long-term lifetime value, resonates with consumers and is the cornerstone of our success.
Why are you raising in the UK?
We have always had an eye on launching our concept in the UK, which is a great direct-to-consumer wine market. There are none of the obstacles we face in the US (geography and compliance) and we are hoping to get started by Q1 next year. At the same time, we have long been committed to the crowdfunding concept because it fits our overall culture. There has always been a lot of appeal to the idea that anyone can invest, and when they do they become some of our best emissaries regardless of their investment size. When the time came for funding, we collaborated with a leading platform in the USA. Their partnership with Crowdcube - the largest crowdfunding platform in Europe - was important for us considering our long-term strategy to have an operating arm in the UK. As it turns out, Splash is one of the first companies being crowdfunded in the US and Europe at the same time. We are proud of our association with what we consider to be the premier platforms in both countries.
You’ve recently announced a deal with chain-retailer and office supplier, Staples. This seems like an unusual partnership - what does it mean for you and how do you see it playing out?
Staples is one of the largest ecommerce sites in the world, with over $10 billion in annual sales. They have 290,000 business to business customers that purchase on a regular basis. Businesses buy wine for several reasons - primarily for gifting to other businesses, for after-hours refreshments in their breakroom, and for company events. With the Staples agreement, the concept is that businesses will now be able to order wine from the same place they get their weekly orders for office supplies. It took us almost a year to put it together, but both parties believe the market potential is huge, and we are excited by the opportunity and the scheduled May launch.
What’s your favourite wine right now?
Now that depends on everything from time of day, the weather, and even who I am with at the time. A bottle at an afternoon picnic with a burger and a few friends tastes a lot different than if I might have the same wine with my wife over a candlelight dinner. I would say that right now I am drinking a lot of Pinot Noir, primarily from Burgundy and Oregon. Having said that, I think if I was in the UK today I would probably pick up a bottle of Radford Dale 2014 Frankenstein Pinotage from South Africa for dinner tonight. Stay tuned, as we get into summer that opinion is sure to change.
You can find out more about Splash, by visiting the pitch page today.
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