Five Ways Cellars, a family-owned wine store has implemented digital tools to take their business online, reach new customers through their ecommerce site and overcome COVID-19 related challenges.
Digital skills acquisition as a survival mechanism: The case of an Australian retail SME
Abstract
Background
Five Ways Cellars is an Australian independent wine retailer with one brick and mortar store. The independent family-run small business has five full-time employees and has been in operation for over 30 years. Five Ways Cellars is primarily a Business to Consumers (B2C) retailer serving local customers, with a small Business to Business (B2B) market, supplying imported European wine to a handful of local restaurants. Despite the presence of large retail conglomerates controlling an important share of the Australian wine and liquor retail industry, Five Ways Cellars has experienced success and built up a loyal customer base. Its owner and founder attributes this success to the personalised and unique in-shop customer experience.
Challenge
The COVID-19 crisis and the lockdown restrictions forced Five Ways Cellars to temporarily close its brick-and-mortar store. The e-commerce website became the sole consumer channel. Five Ways Cellars found it challenging to compete with the large wine and liquor conglomerates who were able to cut prices and offer same-day delivery during this period. The dependence on online retail channels also resulted in new issues arising, such as managing customer’s data. The SME did not possess the skills and even lacked awareness on such digital skills issues.
Digitalisation Path
Five Ways Cellars over the recent years has begun to engage with online platforms and digital tools as a means to connect with existing customers and communicate offers. For most of its existence, Five Ways Cellars used traditional channels (such as flyers dropped into mailboxes) to advertise its products, but in recent years Five Ways Cellars:
created a social media page and started sending out a newsletter to communicate new offers and wine catalogues;
created a “landing page” website, with basic information about the brick-and-mortar stores location and opening hours and a digital catalogue of their retail contents.
In 2020, 30% of small and 34% of medium enterprises in the Australia had a website allowing for online ordering, above the OECD averages of 25% and 21% respectively for each type of business (OECD, 2021[1]). In 2018, Five Ways Cellars further developed their website, adding an e-commerce functionality to give customers the opportunity to make orders online. Orders have traditionally been done in-store or over the phone. This transition opened up new customer markets and lightened the workload for the small team.
Approach
The crisis accelerated Five Ways Cellars reliance on the e-commerce medium and allowed the business to stay afloat during the lockdown. With all Australian consumers ordering wine and liquor online, this was also an opportunity for Five Ways Cellars to engage new customers and those in different markets, such as interstate customers. Through social media channels, Five Ways Cellars could communicate its unique “boutique” offering. As lockdown regulations have eased in Australia, Five Ways Cellars continues to rely heavily on e-commerce channels, particularly for acquiring new customers. The COVID-19 pandemic and its lockdown measures have boosted the expansion of e-commerce towards new companies and provided customers with access to a variety of products. Online retail sales in the EU increased by 30% in April 2020 compared to April 2019 although total retail sales declined (OECD, 2020[2]). According to a survey conducted in Australia 2020, 38% of respondents think that there will be more online purchasing of products even after the COVID-19 pandemic (Statista, 2022[3]).
Government Support
Five Ways Cellars has not participated in any government (national or local) programmes and is unaware if there are initiatives that could be relevant to them.
To learn more about SMEs digital transformation
OECD (2021), The Digital Transformation of SMEs, OECD Studies on SMEs and Entrepreneurship, https://dx.doi.org/10.1787/bdb9256a-en.
OECD (2021), SME Digitalisation to Build Back Better, https://doi.org/10.1787/f493861e-en
References
[1] OECD (2021), ICT Access and Usage by Businesses, https://stats.oecd.org/Index.aspx?DataSetCode=ICT_BUS# (accessed on 15 November 2022).
[2] OECD (2020), E-commerce in the time of COVID-19, https://www.oecd.org/coronavirus/policy-responses/e-commerce-in-the-time-of-covid-19-3a2b78e8/.
[3] Statista (2022), Consumer opinion on anticipated e-commerce behavior changes after coronavirus COVID-19 in Australia in 2020, https://www.statista.com/statistics/1228953/australia-consumer-online-commerce-behavior-changes-after-covid/.
