The launch of uvine.com last Monday hit the news when it announced its ambitious plan to bring the £1bn-a-year fine wine market online. By incorporating a simple bid and offer system, uvine intends to replace the traditional auction houses with an electronic trading system based on the stock exchange.
It is doubtful that many fine wine producers, merchants and consumers are currently online, but uvine aspires to revolutionise the wine trade by offering transparent market prices and the lowest ever exchange fee of 3.5 percent either side.
Christopher Burr, Chairman of uvine, is former international head of fine wine at Christie's. techTrader spoke to Burr about the impact that the Internet will have up one of Britain's most traditional markets.
Why did you choose wine as your commodity?
The way of selling wine hasn't changed in 250 years. It is a wasting product -- the idea of moving it about for trading is ridiculous, and it is usually passed through four to five hands before the consumer gets it, which increases price and timing. The Internet is the most amazing technological invention: it speeds up the time of the transaction, allows transparent pricing, and is able to offer a huge range of products. Like the stock market before the stock exchange, the wine market has become dull and expensive.
Why did you decide to operate under the stock exchange model?
We're not in the business of holding stock, so the model of buying stock and then selling doesn't appeal to us. The auction process caters very well for that method of selling (as being used on sites such as ebay.com), but we feel that this style of trading is not in the best interests of the buyer or seller. The buyer ends up having to pay way over the odds.
People will soon find out what the market price is through uvine.com -- the system is fairer and much more long lived.
What effects do you think the Internet will have on this market in the future?
Experience shows that the speed of transactions increases the size of the market. In the auction space it takes 3 to 6 months to complete a transaction, whereas this can happen immediately on the Internet. I predict that the Internet will have a dramatic effect on the size of the market, with the commerce being traded more frequently. By adopting the stock exchange model, the wine doesn't have to be moved physically over the world, and it can be stored in its proper conditions.
Are you concerned about the problem of fraud on the Internet?
Fraud is a risk to both parties. From our point of view, we are checking the provenance of the wine and inspecting the bottles, and if there is any doubt in our minds we open the bottle and test them. Rigorous checks are in place, and if we miss something, I will look at the empty bottle and give an informed view.
Fraudsters are very clever -- we have put in place a system of marking the bottles that have passed through our hands. We will immediately refund a fraud purchase that we have sent out.
What kind of relationship are you hoping to build with your customers?
I come from a traditional wine trade background that is very friendly. I hope that this personal contact with the clients will continue -- after all wine is there to be drunk and enjoyed. We may end up holding tastings so that we can get to know our customers better.
Is the typical wine dealer currently online? Do you think that you may loose a percentage of your clients by going online?
I think that a lot of them won't be online -- for example small wine producers in Burgundy won't have Internet access. Our team is here to help people through the process though. If they are intrigued and see the benefits of trading online, hopefully they will try it once. I feel that the design of the site is very important here -- if I can do it, and find it easy to use without getting bored, then I believe that users will be compelled come back to the site. We don't want to change the industry overnight; it wouldn't surprise me if we only have a few tens or hundreds trading in the first few months. There will always be those who won't be willing to replace the experience of auctions.
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