ROWAN GORMLEY: One day we'll stop paying to be sold to

Sales costs are about to go out of fashion, argues Naked Wines founder Rowan Gormley.

by Rowan Gormley
Last Updated: 09 Oct 2013
I have a theory. I think I know what the next 'big thing' is: the innovation that will surprise us all. The one we will all look back on and say, 'do you remember before, when we used to...'

And this is it. People will stop paying to be sold to. That's it. I know it doesn't sound dramatic or profound, but think about it for a minute.

Right now, very little of the price we pay for stuff is the stuff itself. When we buy a book, we pay say £10. The author gets pennies. When we buy a CD, the same. This magazine. A packet of cornflakes.

Some industries realised this years ago. Ryanair figured out that if they charged like the planes were full, they would be full. So they did - and they are.

But still, to this day, a sickening amount of the money you earn goes on paying to be sold to. You can't taste it, you can't enjoy it, it doesn't add to the economy. It's just waste.

It doesn't have to be that way. And if it wasn't, that would be a good thing. The price of goods and services will fall dramatically, putting luxury products in reach of normal people. Talent would get the price it deserves.

I can hear the chorus of naysayers already, but I have proof. The company I run, Naked Wines, sells wine at wholesale prices to customers who pay not to be sold to. In less than five years, it has grown from an idealistic idea into a $100m business shipping 10 million bottles of wine a year.

How does it work exactly? We have 150,000 customers (called 'angels'), who invest £20 a month with us. We take this money and invest it into independent winemakers. In exchange, we get their wines at preferential prices, which we pass on to our customers. And because they have already paid for the wine, we don't need to waste our time or their money selling their own wine to them.

There are others. Zopa has loaned £400m of people's money to other people. Made.com makes designer furniture affordable by crowd-funding.

It's just cutting out the middleman, right? Wrong. Our Angels don’t just buy direct. They make wines happen. They set winemakers up in business who would have no chance of doing so otherwise. Their reward is pricing that cannot be achieved any other way. It is the exact opposite of the supermarket model, where you use your size to screw your suppliers into oblivion. Zopa doesn't just introduce lenders to borrowers. They make the risk manageable to normal people.

This is not to say that we don’t spend any money on selling. We do. Otherwise how would people hear about us? But we spend much, much less. When you buy a bottle of Naked Wine, you get mainly wine. Not  sales and marketing.

So why doesn’t everyone do it? Because it’s hard.

Existing companies have traditional sales channels they can’t just walk away from (remember how long it took airlines to have the cojones to undercut the travel agents?). To succeed, you have to be open and transparent (that’s where we got the Naked part of our name from), which can be scary. When we screw up, our customers tell us about it, publicly and loudly.

And finally, it has to be real. Our wines have to taste better and cost less money than your supermarket, otherwise why would anyone pay for it in advance.

It is worth it, though. We don’t do this because we are nice (even though we are). We do it because it is better business. Collaboration works better than confrontation. Nakedness works better than the emperor’s clothes.

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