Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Underground Cellar: A New Hybrid Startup? Clever Wine Marketing Boosts Commerce Platform

Posted by Tom Foremski - September 4, 2014

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I recently met Jeffrey Shaw (above) , CEO of Underground Cellar, a startup focused on helping wineries sell wine online. He and his team has developed a great technology platform to allow wineries to market themselves and sell their wines but it is also using its own platform to sell wine on behalf of many wineries -- using a clever business model.

Shaw explained that when wineries want their help to shift certain wines, Underground Cellar will taste the wines first and then agree to sell a set number of cases and take a sales commission. It always asks the winery to give it additional cases of some of its other lines, often high-end expensive vintages, and those are used to reward its customers.

When customers order wine, they have a chance to win additional bottles for free, equivalent to what they have ordered, or better. The probability of winning extra bottles is shown each time in real time.

[All it needs (below) is some revolving cherries to create a virtual one-armed bandit.]

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Customers used to have to wait until their order arrived to see if they had won but Shaw says telling them immediately if they have lost gave them a ready opportunity to place another order and try again, and many do. 

Additional services include storage of customer's wine in its "Cloud Cellar" with courier shipping for same day delivery.

Shaw says that his startup is a technology platform and he thinks it could be used for many other types of products and services. But it clearly is more than that. The startup also represents wineries online with sharp marketing and page designs, and it is becoming an important e-commerce partner for many wineries.

Underground Cellar is really a new hybrid, a high-tech enabled marketing and e-commerce agency. I'm sure we'll see more of this type of company because it combines three essential business services in one package.

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