Lot 18 →
“Lot18, a flash wine and gourmet food sales site, is on track to generate $25 million gross revenue this year, a source close to the company tells us.”
Businessinsider; 11-Month-Old Wine Site Lot18 Is Generating $25 Million This Year
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It’s pretty amazing how they’re generating this amount of revenue in less than a year of existence. They closed a Series B at $10 million in May, bringing total funding to about 14.5 mil.
I’m trying to find the reasons as to why this start-up is doing so well, and immediately I see elements such as 1.) Gilt Groupe-esque exclusivity, 2.) a knowledgeable user-base and 3.) 30 billion ‘niche’ industry.
1.) Having an exclusive buyer’s member club ensures that your users are committed to the product you are selling. That means they know it, love it and would like to obtain it.
2.) As a result, your user base is knowledgeable about the product (or in this case, products) you’re selling/vendoring. They know how to discern, and if you offer good products - which is what you should be doing - at a fair or great price, they understand that you are a good service and are likely to stay committed to your service.
3.) HUGE Market. 30 billion dollars isn’t really ‘niche’, considering six out of ten Americans drink wine. This is a massive market! And the right market to succeed in, also considering since Gilt has just launched it’s own wine site and Amazon has tried in the past. A service like this fits well within this market, there is a convenience for the user when a service like this connects the user to a whole variety of wineries. Also, their substantial revenue growth should be a testament to Lot 18’s usability.
They have mentioned that they operate like an eBay-like marketplace. But I wonder what their exact revenue model is like. Do they take a commission from wineries per sale? Or do they charge wineries a fee to have a presence on their site? Would be excellent to know these things.
Lastly, what really makes me root for this start-up is that they have a long-term vision, as according to President and co-founder Philip James. Considering that they are an attractive target for an equity buy-out/takeover, it’s commendable that they are expanding their business (moving to food tours and food now, apparently) and not looking for a quick flip. It’s companies like this that truly disrupt (on a hidden scale) and truly innovate a space.
