'Why I cut my physical store and went online'

Taking his knowledge from his previous e-commerce business and combining it with his passion for unique drinks, Mybottleshop.com.au founder Steve Rider speaks to My Business about how he managed to grow his business, and how he plans to take it even further.

No one truly starts out from scratch. Everyone has some form of experience they can adapt to brand-new situations.

This goes especially for Steve Rider, founder of the online platform Mybottleshop.com.au, which focuses on finding unique alcohol products from around the world and delivering them to the homes of customers.

Since starting out in 2013, Steve has been constantly applying new techniques to present customers with even more unique products, and has also been keeping up with growth opportunities.

Starting out

“When I came out of uni, I went in and started an e-commerce software company,” Steve explains.

“My background's always been on the software side, but my passion has always been for drinks, for hospitality.”

“Our drive at Mybottleshop is to bring this burgeoning cocktail culture into people's homes.”

Steve travelled for work conferences, and afterwards visited breweries, wineries and distilleries.

“I could see that the product they were making, it was vastly superior to what was available on the supermarket shelves here in Australia,” he says.

Impressed with alcohol products he found around the world, Steve wanted to share them with others.

This notion started to come to fruition in 2007, where he opened a bar that featured the unique alcohol products he discovered.

“These were ... a lot of products that people [had] never heard of. We had a beer on tap that was made from a local brewery; people's eyes were popping out when we had the cocktail list,” he says.

“People were going, ‘Wow, this stuff tastes great. It's something I haven't seen in my local liquor store, it's something totally different. I really want to experience this product’. But they wanted to experience it in their home.”

“It's one thing to go out, and everybody loves to go out and socialise, but there's only so many $20 cocktails that you can buy.”

After discovering that there was a real desire for unique alcohol products, Steve sold his e-commerce business to start up Mybottleshop.com.au.

“Our drive at Mybottleshop is to bring this burgeoning cocktail culture into people's homes,” he says.

When the price is right

Steve faces serious competition from some of the big supermarkets that have alcohol offerings. However, he says getting caught up in competition is a recipe for disaster.

“We try and set the price in the market for the simple reason that the product isn't available anywhere else,” he says.

“We have to create that demand.”

Some supermarket chains, Steve explains, sell their alcohol at a margin of 4 to 6 per cent, but for Mybottleshop.com.au to continue operating, surviving on such a low margin just isn’t feasible.

Steve Rider, Mybottleshop“I need 20 per cent margin to stay in business,” he says.

“For every dollar in sales I end up with 20 cents in my pocket, and out of that I've got to pay wages, I've got rent expenses, I've got all the operational expenses of the business.”

Another factor that comes into his pricing is the cost of importing products from overseas.

“[Some suppliers] don't necessarily release into Australia all the products they could, and Australians miss out because of that. Especially Europe and the US: they have incredible products over there,” Steve says.

“That means we jump on a plane and we go over there, and we negotiate with the suppliers there, try and get the quantities.”

Raising capital

To grow Mybottleshop.com.au, Steve had to look past his customers and himself and look towards venture capital.

“When we've gone out there and looked at ways we can raise more capital ... one of the things we've been going down the road of is an [initial public offering], and we commenced that process [at] the beginning of this year,” he says.

At first Steve personally funded $3 million into the business to pass numerous phases of business funding, but it wasn’t enough.

He was told he needed upwards of $10 million, which, according to Steve, isn’t available in Australia, so he looked to the US.

However, this had its own problems.

“In the US, they look and say, ‘Is this a tech business? That's what we're interested in’,” he explains.

“‘Hang on, they hold stock and they've got property. We don't know about that. We really want Airbnb or Airtasker’. Transactional businesses is what is traditionally thought of as a tech company.”

To secure further venture capital, Mybottleshop.com.au had to appear as more of a technology-based business.

Dealing with a digital platform

Having an online store allows Steve to utilise his background in e-commerce to improve customer retention.

“What we can do is, based on the purchasing behaviour of the customer, we can then give them more tailored offerings so we're not wasting their time.”

To purchase from Mybottleshop.com.au, customers need to supply their details to ensure their purchases are delivered, as well as to check that they can legally purchase alcohol.

“We've got this incredible wealth of knowledge about our customers, because we have to know that they're over 18 to buy from us, so we know their date of birth,” Steve explains.

Steve Rider, Mybottleshop“We know their address information … we know their age, we can track their purchasing behaviour, we can see what they buy, how much they spend, where they’re located, what's the average spend in that suburb.”

This information allows Mybottleshop.com.au to suggest products based on customers' purchasing history, but there are plans to expand the use of this information.

“Because we've got people's birth dates, we have plans to offer them birthday presents: a birthday offer, birthday coupon code,” says Steve.

“What we can do is, based on the purchasing behaviour of the customer, we can then give them more tailored offerings so we're not wasting their time.”

The planned use of customer data is not just restricted to benefiting customers, but will also help Mybottleshop.com.au itself, as the data can be useful to sway sceptical suppliers.

“As time goes by we'll be able to go to our suppliers and say, ‘Look, you've got a Smirnoff, you've got a peppermint candy-flavoured vodka, well we've got 4,000 people who have purchased a very similar product in the last 12 months.’ We'll pitch that offering directly to them,” Steve says.

Fast facts:

Name: Mybottleshop.com.au

Industry: Online retail

Location: Sydney

Established: 2013

Client base: Largely Australian, but also international

promoted stories