An emerging technology company servicing the global beverage industry, Digital Wine Ventures (ASX: DW8) has been a hot topic of discussion in the global F&B market and the Australian Stock Exchange (ASX). Under the esteemed leadership of start-up veteran and wine enthusiast CEO Dean Taylor, DW8’s cornerstone investment and B2B marketplace, WINEDEPOT, provides an end-to-end supply chain solution for the wine industry.
WINEDEPOT Processes Initial Surge of Orders
On behalf of the paying customers, WINEDEPOT has successfully processed its first wave of orders. This consequently indicates that revenue generation from the platform will commence in the current quarter, in line with management’s expectations, as was previously suggested.
In the September 2019 Quarterly Report, Mr Dean Taylor had confirmed that WINEDEPOT expects to start onboarding customers and generating revenue in the 2nd quarter of FY 2020. Upon the B2B marketplace launch, additional revenue was expected from trading fees for processing orders via DW8’s B2B Marketplace.
Currently, WINEDEPOT generates several revenue streams per case of wine (depending on volume & size)- Fulfillment fees, Storage fees and Surcharges (for the range of services discussed below). Every single commercial agreement is subject to an agreed Rate Card that outlines the fees as well as charges payable for each of the services provided, and a copy of WINEDEPOT’s standard Rate Card is available on #/.
The range of services includes:
- Receiving, picking, packing, next day delivery - Fulfillment fees
- Holding and storing products within DW8’s network - Storage fees
- Use of DW8’s cloud-based ERP application/s
- Various optional services - Surcharges
Breaking Down WINEDEPOT’s Revenue Generation
CEO Dean Taylor explained the way in which the vertically integrated platform provides the ability to generate both transactional and logistical revenues:
- Currently, the primary source of revenue is from logistics fees, which are entirely volume driven.
- The next phase of the platform will be the establishment of a B2B marketplace post which DW8 will also generate Trading Fees (value driven) with WINEDEPOT taking a percentage of the overall transaction value.
- DW8 outsources 100% of the logistics services to its logistics partners under variable cost agreements and generates a profit on every case that flows through the platform from day one (not considering corporate overhead costs).
- Over time, trading fees should become DW8’s largest and most profitable revenue stream.
- Meanwhile, the logistics solution is utilised to acquire suppliers and generate cash flow that is reinvested to establish the B2B Marketplace.
- DW8’s revenue and profitability are directly linked to the number of suppliers, products and orders processed each day, and growth across all of these metrics is noticeable.
- In the eight-week lead up to Christmas, an immense volume of goods is sold online, annually, which creates a backlog on the freight networks, forcing retailers to publish cut off dates to guarantee that their customer’s purchases are delivered before Christmas. Online retailers often miss out on millions of sales each year, as the cut offs are weeks ahead, especially in the liquor category.
The WINEDEPOT Platform and Progress
A SaaS, B2B trading and logistics platform, WINEDEPOT was launched at a major wine industry event (Wine Industry IMPACT Conference) held in Orange NSW on 17 September 2019. The integrated platform is already in use, as at the time of its launch, there were over 150 suppliers expressing their interest in utilizing the platform. The number grew to 200, as notified in DW8’s quarterly report on 30 September 2019.
It is designed to connect wine industry stakeholders, wherein they leverage their combined buying capacity and common resources to eventually cut down on wasted capital and margin as well as time, in the existing supply chain.
In July, the platform partnered with Australia Post to create a specialised wine distribution service, under the agreement to establish its first four depots within Australia Post’s existing distribution centers in Sydney, Melbourne, Brisbane and Perth.
Shortly after, WINEDEPOT partnered up with Wine Storage and Logistics Pty Ltd to establish major wine storage and distribution center to service local and global markets. This partnership will provide the platform which will be accessible by over 200 wine producers.
To progress the development of the platform, Digital Wine onboarded Mr Richard Van Ruth as Business Development Manager and Ms Anna Donald as Inventory & Operations Manager, with their terms effective from October 2019.
On 21 October 2019, WINEDEPOT signed up Australia’s largest family owned winery, Casella Family Brands as a customer. Under the agreement, WINEDEPOT will manage Casella’s entire product portfolio across a range of domestic channels. Moreover, several other smaller scale wineries (like Redman Wines, Gatch Wines, Maan Wines and Brown Hill Wines) were confirmed to be using WINEDEPOT’s services.
To enhance WINEDEPOT’s expansion, additional human resources, technology R&D, marketing & advertising, and for general working capital, DW8 is already on the track with confirmed funding commitments.
Share Price Information
On the back of WINEDEPOT’s progress, DW8 built the investors’ sentiment positively on the ASX on 22 November 2019 as the stock soared 16.6% to settle at $0.007. The stock last traded at $0.006 on 25 November 2019 with a market cap of $7.15 million and ~1.02 billion shares outstanding. The YTD return of the stock is 40.99%.
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