Company Focus: Wine Shop At Home

The party plan method of direct selling offers people much more than the opportunity to purchase exceptional wares. These days, home parties are a chance for friends to get together to enjoy music, food and perhaps a glass of wine or two, while their host demonstrates distinctive products. At WineShop At Home parties, it's no different-except the product that guests learn about is that glass of wine.

WineShop At Home Co-Founders John and Melissa Lynch have spent more than 10 years helping customers all over the country "discover wines effortlessly." In 1995, the couple launched 1-800-WineShop, which sold wines and wine gifts through direct mail, catalogs and its online site at the very beginning of the dot-com era. "We were that little engine that could," says John. "Melissa and I are the sole founders of the company-we initially funded it personally-and it really started to grow. You run a company a little differently when it's yours-when it's your shingle."

The pair spent the latter half of the 1990s nurturing their company and navigating the complex laws that regulate the sale of alcohol, which vary by state. But in the late '90s, two well-funded companies, wine.com and wineshopper.com, gave1-800WineShop some stiff competition and the Lynches began to consider another channel of distribution. When Wine.com became another casualty of the dot-com flameout and faced foreclosure, John was tapped to play a part in the company's liquidation. "We ended up with some cash and a giant pile of wine-just over 10,000 cases-and as a small emerging company we wanted to find a way to turn it back into capital," says John. "So we said, 'Hey, how about having a wine tasting party?' "

So beginning in 2002 the company began sponsoring 1-800WineShop in-home wine tastings. "Remember, we still had a lot of existing clients, but we knew nothing about direct sales. But the company already had the culture, we had a wine club that had a great following and our members were almost militantly loyal," says John. "We had all the parts of a direct selling company. We just didn't know it yet."

The first in-home events were so successful that the Lynches knew they were onto something and began to seriously investigate the direct selling channel of distribution. John's niece is a director at The Pampered Chef and he soon found himself hosting a party and selling (and buying) pizza stones to get a feel for the industry. The next step was joining the Direct Selling Association. "The first event we went to was in Long Beach, California, and we were pleasantly relieved that there were a number of companies asking, 'does the emperor have clothes?' " says John. "And it was wonderful to walk up to an executive with Herbalife or Tupperware and see that these people were giving us their time." At DSA events, the Lynches met a number of industry veterans who advised them on everything from their compensation plan to incentive trips to the company's Web presence.




WineShop at Home
Co-Founders John
and Melissa Lynch

In 2003, WineShop At Home's first consultants began hosting tastings in the state of California. By 2004, they had branched out into four states, last year nine states and currently the company has consultants in 15 states. Last year, the Supreme Court struck down a ban against interstate wine shipments, which for WineShop At Home, translates into growth. "We are careful builders but we will be in 25 states at the end of the year," says John, pointing out that his years in the wine business and operational experience helped tremendously early on. "Remember the company already shipped millions of bottles of wine prior to doing its first wine tasting party."
While having an infrastructure in place gave the Lynches a leg up, transforming a direct marketing company into a direct selling organization was not without its challenges. "We had existing clients and we had to say, 'No, really, we're in the direct sales business,' " says John. "And we had to show our consultant base that we were by no means in competition with them."

By providing their consultant base with the resources necessary to succeed, the Lynches made the WineShop At Home business opportunity attractive to prospective recruits. "We work for our consultants. I come to work every day working for our independent wine consultants and their customers. That is why this business exists," says John. "So what we did was demystify wine and make it fun, and translated that into training our sales force. If you don't make it easy for someone in Ohio or Texas to start and hold the wine tasting parties, you can't grow. Instead we put the proper tools, great products and a world-class customer service group in place, and that's why we're growing at the rate we are."

In fact, John says, because of both the products and the opportunity, WineShop At Home is drawing consultants not commonly found in most party plan direct selling companies. "A typical party plan company is predominantly women, but we're not only seeing men getting involved, but couples," says John. "At WineShop At Home, couples are allowed to sign up as a team. They get to spend time with each other, they're running this little business that they enjoy and it's like a new career for them."

John is not only passionate about his sales force; he's passionate about the wines he sells. When he and Melissa first started out, it was a struggle to procure wine from the small boutique wineries that produced limited quantities. "I remember that first buy; it was like pulling teeth to get 10-case allocations from wineries. Now we show up with the semi truck and a checkbook," says John. "We've built relationships with people who put their lifeblood into their businesses with passion and good taste and they entrust us with limited-quantity product."

Those relationships have paid off: WineShop At Home became a winery last year and has slowly introduced 18 brands that the company owns exclusively. John says the company's goal is to produce 100 percent exclusive wines by the end of the year.

With an infrastructure built from 10 years in the wine business, a loyal and growing salesforce and the ability to offer wines not found anywhere else, John is certain that WineShop at home is poised for explosive growth. Lynch believes that combining the $28 billion wine industry with the $30 billion direct selling industry is a recipe for success. "We will be the size of a Shaklee or a Pampered Chef, without question," he says.


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