Kickstarting A Direct-To-Consumer Wine Business

Describing a business as “a mediocre corporation” usually doesn’t generate a stellar review. A small subset of workers and entrepreneurs in Dallas, however, work at a company that intentionally branded itself that way.

“We really tried to lower expectations with the brand,” A Mediocre Corporation Founder Matt Rutledge said.

A Mediocre Corporation is an incubator pursuing its passion for experimentation in eCommerce by building out and testing new types of online commerce.

“Our overall mission is to eliminate retail middlemen by providing as direct a channel to producers as possible,” Rutledge wrote in a note to Recode, “furthering our apparent demise.”

It is, admittedly, an unusual outlook, but Rutledge and company are not quite the typical team in eCommerce. Before they ran an incubator, they were the founders behind Woot.com, a once much-beloved, deal-of-the-day website that offered up flash sales of products, which expanded into a series of other verticals and more creative offerings. The “Bag of Crap” — made up of leftover inventory and (sometimes) office supplies — was particularly popular.

Woot and all its subsidiary properties were eventually bought up by Amazon in 2010 for $110 million, and slowly but surely changes came to the site. Rutledge departed in early 2013 to found A Mediocre Corporation with much of the Woot team to pursue their dream of creating eCommerce middlemen to eliminate middlemen everywhere.

Meh.com, the incubators’ earlier experiment in eCommerce, is something of a known commodity, since it’s a deal-of-the-day website similarly structured to Woot. Their latest up-and-coming offering, Casemates, also has a familiar ring to it, as the wine marketplace bears some resemblance to a previous offering, Wine.Woot.

Casemates, however, offers a new approach, filling a recent hole in the marketplace.

Bridging a Gap

Wine.Woot is a past-tense offering, as is Amazon’s wine distribution site — as the firm is rethinking its alcohol strategy in the wake of its Whole Foods acquisition. Rutledge said the departure of Amazon offers a rare opening into an eCommerce marketplace where they can offer consumers a chance to purchase products directly from wineries.

Direct sales in alcohol are difficult because of the three-tiered system that divides the process between distributors, retailers and consumers, such that only retailers can buy from distributors, and only retailers can sell to consumers.

It can be tricky to navigate, but Casemates’ strategy allows consumers near-access to winery products with limited sale events. New wine deals will launch three days a week at midnight ET — Mondays, Wednesdays and Fridays. One deal ends when the next begins, and shipping is $8 to $12 per order.  (Casemates makes it money on commissions paid by wineries for each sale.)

Consumers are given better pricing the more they buy, with the intent to get customers buying wine by the case. The broader vision encompasses a community-centered product, so that customers don’t have to make a big commitment to a single winery. Instead, they’re able to split their purchase up with other consumers. Noting that Casemates “will need a strong and vibrant community to succeed,” Rutledge said the site is built to allow geographically co-located buyers to split payments on a single case.

A need for community is what pushed Rutledge and his team to launch their newest project on Kickstarter. The incubator already has the funds, but a community of mates is key to building the brand and making direct wine sales for enthusiasts possible.

“We pioneered the winery-direct retail model for wine fans to buy online, from winemakers, with no middlemen,” the campaign page reads on Kickstarter. “We created this method — we’re not even a store; the wine you’re buying is sold by the producing winery. So no one’s better positioned than we are to step in and rescue it from extinction like John Hammond with the velociraptors.”

They are nothing if not a creative group.

Will they succeed?

The Woot team knew how to turn branding into an active — and at times fanatical — online community, one what was worth a nine-figure buy price. Casemates certainly has the same energy and early enthusiasm. The campaign surpassed its $50,000 goal on the first day and is now sitting a little north of $111,000.

But alcohol is a tough business to crack — and an increasingly competitive one from a variety of angles.

And, of course, Amazon has abandoned the wine business — but is sure to be back. The question will be if Casemates has built its niche firmly enough to withstand the return of the king.