Market Making Via Innovative Product Development
Digital Growth Insights is pleased to publish this contributed piece by Richard Hewitt, Director of Product at Liv-ex, the largest online marketplace for wine. Richard describes how software product development has fueled the growth of the company, turning it into the “Bloomberg News” of the fine wine industry.
Liv-ex is the leading online marketplace for professional buyers and sellers of fine wine. By leveraging the power of the Internet and digital technology, we’ve transformed a fragmented and opaque industry into a data driven, multimillion dollar market pegged at $4 billion globally.
James Miles and Justin Gibbs, who co-founded Liv-ex 14 years ago, are former stockbrokers rather than wine merchants. As the Internet exploded on the scene in the late 1990s, they were astounded at the fact that despite wine has been traded for centuries, there was no data available that tracked its valuation over time. Fine wine was a commodity with no trading exchange.
Liv-ex built that exchange, and in doing so built the world’s largest database of standardized fine wine prices: the Bloomberg News of the wine industry. Of course the Internet totally changed the game from a computing and distribution standpoint. Wine can often be a great investment, and now the market has analytical data demonstrating that for the first time. However, our consistent growth has been fueled by the realization that Liv-ex is not a wine company, it is a data company.
The collection, curation and analysis of that data drives our software product development strategy. Setting up the Liv-ex Fine Wine 100 Index – think of it as the FTSE 100 for the wine world – was just the beginning. Our growth is increasingly being driven by finding new uses of our data. Following a Service Oriented Architecture model (SOA) kept things efficient for us, and many services originally developed for internal use have found eager clients outside our firm. So we have been able to develop once, and leverage repeatedly.
Recently, third parties are increasingly building their own applications and services using our data through APIs. They are taking our digital zeroes and ones into turning them into new online experiences. A company’s digital product development today has to be more than pretty code, or even a specific application. Your technology must be connected directly to your business objectives, and to creating new, revenue producing experiences for customers.
Liv-ex saw early on that data driven companies need to leverage web services and the cloud to power constant product refinement and development. We are currently deepening our relationship with leading cloud provider RackSpace to ensure our global infrastructure can support our growing customer base.
For a data driven company, product innovation is limited only by a company’s vision. As the influence of data and our exchange grow, Liv-ex is exploring new services. We’re looking at ways to power a unique product code (UPC) for the wine industry, as well as a network of managed warehouses for fine wine. This way, consumers could pay high prices for certain vintages with far more confidence in how the wine has been treated prior to purchase.
We’ll continue to face business challenges as we drive this kind of significant change in the wine industry. But in today’s business climate, there is no such thing as standing still.