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1855.com : how long can they survive?

Life is sometimes hard, especially for losers. Within a few days I read two different articles about 1855.com. The first one was published in the magazine “la Revue du Vin de France” which is a magazine specialized in wine and wine making. The other one was published in Le Figaro, a few years ago.

I must admit 1855.com did very well in getting outstanding press coverage. They went to the stock market, and purchased two other companies in the same industry: caveprivee.com and their biggest competitor Chateauonline.com.

However, after proudly announcing in 2011 that the balance sheet would be green (meaning positive) after years of red figures, the disappointment was obvious among investors when 1855.com reported once again losses.

I found funny to compare the two articles which depict pretty well how the situation evolved in 4 years time.

The article published in June 2007 started like this: “customer is King. President and co-founder of 1855.com, Emeric Sauty de Chalon doens’t explain differently the great success of his company”

For those who know how many customers filed a complaint with the French authorities, I found especially “interesting ” to read the conclusion of the article: “the secret of our job is to respect the customer. The customer who orders 150€ worth of wine per year is as important as  the one who orders 10 times more”. If you take into consideration that a class action was started by a dozen customers who are still waiting on 90000€ worth of wine from 1855.com, I remain skeptic about the trustworthiness of the founder of 1855.com.

1855.com co-founder Thierry Maincen eventually left the company and Fabien Hyon (with whom I have had an excellent contact in the past and who gave me the feeling of being sensitive to customers’ issues and willing to deal with them) took over the role of managing director.

Despite all his efforts the question remains whether 1855.com still has a future. How can a managing director possibly deal with years of negativeness (in terms of customer feedback but also of financial results). From an operational viewpoint I’m pretty sure Fabien Hyon has the right set of skills to do it well. Still, one variable is not under control: the customers. Negative experiences are most likely to dramatically impact loyalty rates and given 1855.com positioning as a “top-tier” actor (they claimed to be the “Hermes of wine”) customers are most likely costing a lot to acquire.

The RVF article gives an interesting example of this. 1855.com has successfully organized tasting sessions in luxury hotels where you have the possibility, for a modest entry ticket of 25€, to attend and taste as much as you want. At the Champaign event the RVF journalist surveyed customers who confessed they were here to make their choice but who would not buy from 1855.com given their reputation. Cross-selling opportunities may therefore not turned out real.

My take:

1855.com drags its negative reputation and it seems difficult to recover. Moreover, as I have often explained, I think the online wine market  has become for 99.99% a commodity in the sense that the client seeks the lowest price (he is helped in this by a multitude of specialized search engines). The future seems dark for 1855.com in France and I wonder if the grass is not greener elsewhere, that is to say, in more distant countries where it would be possible to regain its virginity more easily and start from scratch again. Last but not least one paradox is that the “Hermes of wine” has remained a French companies serving primarily French customers although the top-tier market has long gone away from France

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Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)

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