31DOVER founder on cracking the drinks market and why next-day delivery should be a given

Drinks entrepreneur David Elghanayan doesn’t flinch at the prospect of coming up against industry heavyweights like Waitrose and Laithwaites Wine.

His online business 31DOVER.com may be a relative newcomer – launched in 2012 – but it has already wiggled its way into favour with consumers, and recently picked up Online Retailer of the Year at the Drinks Business Awards.

The alcohol retailer specialises in spirits and aims to provide an extensive offering of the latest “must-have” drinks, delivering them directly to customers. All drinks that feature on the website are tasted by Elghanayan’s team to maintain a certain level of quality.

Elghanayan himself is something of an old-hand when it comes to the drink industry. He also founded Vanquish Wine in 2005, which supplies numerous London late-night establishments. Along with his co-founder Jimmy Metta, Elghanayan saw an opportunity to create a business that catered to the supply of premium nightclubs and bars “at a time when that world – bottle service and big spenders – was exploding”.

He added that being “young and aggressive and generally ignored by our much larger peers” meant they were able to penetrate and quickly dominate that market by focusing on only half a dozen products that its clients needed, but were hard to find. By focusing on a few products like Louis Roederer Cristal, the duo were able to dominate on price and hold signification allocations to fulfil the demand.

Vanquish caters for bulk daily deliveries to London venues, but Elghanayan said the good pricing meant friends and family would call up to ask for odd bottles for events. “While we never like to turn down business, that scale was more of a hassle than a benefit to the company,” he explained. It did, though, flag up the possibility of a B2C offering in the form of an online retailer and 31DOVER.com was born.

The British alcohol market is worth around £36bn, which Elghanayan said makes it “one of the largest drinks markets in the world”, with about £15bn per annum consumed in the off-trade alone. While it may seem well-catered for, a gap soon became clear to him. Online drinks sales are “embryonic” while the market is “highly fragmented”, between the supermarkets and the specialists. 

The big retailers don’t tend to carry an exciting range, so Elghanayan saw the opportunity to create a leading independent generalist drinks shop. One that’s “highly curated”, but also offers good pricing, class delivery, customer service as well as innovative marketing and a “constantly evolving range of products and services”, as he put it.

Some six per cent of the £15bn mentioned is online, just where 31DOVER hopes to clear up. The potential is clear when taking into account the further consideration that the market for gifting alcohol is worth around £1bn.

It has been an effective strategy, and with revenues set to rise by 300 per cent in 2015 to £4m, the company is on track to raise £3m from private equity in the next year too. In 2014, the retailer sold a 35 per cent stake in the business to a group of French investors – reportedly for £1.3m.

The presentation of 31DOVER is as a general drinks shop – not a daunting prospect to your everyday consumer looking for a range of alcohol. Elghanayan pointed out that it’s curated by professionals and customers alike, “with easy ways to discover and navigate the drinks we stock”, which allows a blending of the specialised and the mainstream. You can pick up your day-to-day favourites, while also browsing brands you may not have come across before.

As well as the competitive pricing, the other jewel in the online retailer’s crown is its next-day delivery as standard. We’ve seen the ecommerce battle unfold amid big names and challengers alike, and where fashion retailer ASOS initially stood out was for this very same attribute – appealing to the rising customer expectation of getting products fast.

Elghanayan is clear where he stands on the delivery debate – next day is the “minimum a national company should be providing” in the online world we’re now living in. A key asset of 31DOVER is being able to execute it “extremely well and on a consistent basis”, whether it’s one bottle or a hundred. Elghanayan admitted he spent a “huge amount of time and investment” in developing resources that were efficient and reliable, while also able to scale-up with the business.

“Service and logistics were a cornerstone of our business plan – we knew a great alcohol shop wouldn’t work if you couldn’t back it up by having excellent next-day delivery as standard,” he explained.

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Elghanayan and Metta have been savvy at disrupting a market, something many budding businesses struggle to accomplish. Does he have any particular advice in this area? “Conduct through market analysis, understand the business drivers, the competition, and potential risks and pitfalls to your execution,” he outlined.

“Entrepreneurs I meet today seem to think that the idea is what’s most important. It’s obviously an essential starting block, but we have seen many excellent ideas fail due to poor execution,” he said.

If you’re certain the fundamentals make sense, Elghanayan advises pushing forward but “giving the time, energy and will to make a dent in the market”.

Elghanayan’s own desire to make a dent in the drinks market isn’t just limited to alcohol. He also owns tea bar Amanzi, which is set for expansion. He’ll be looking for private equity funding to drive the development, with the next store is opening in Brewer Street in August.

The initial location was Marylebone, which he said was picked for its “great demographic, with a cross between people who work, study and live there”. Its transition into an “interesting shopping destination for new brands” and boasting “seven days a week trade” also came into consideration.

The business originally had stores in the US, but it meant developing a “brand new skill set” for Elghanayan and essentially starting the business from scratch. The tea bar offers standard options, high-end offers and many in between – hot and cold teas are available, so too are smoothies and non-alcoholic tea cocktails, with popular options including lychee and pomegranate. 

It’s a similar ethos to 31DOVER – branching between the specialist and the general, which Elghanayan has seen as a successful path so far. 

He hopes to sprinkle a further seven or so branches of Amanzi across the capital, and alongside the ongoing development of 31DOVER – Elghanayan is on a constant quest to “find the products that no one else can get” – it looks like his disruption of the drinks industry isn’t finished just yet.

Image: Shutterstock

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