When Jeremy Howard took over a small retail wine business in 2008, he thought he could do a better job of running it than the original owners. Five years later, he had helped transform it into an online wine retailer – Cru World Wine. From there, it went on to become a highly successful online platform for managing fine wines and spirits, achieving revenues of US$60 million in 2021, a five-fold increase over its first full year of operations in 2014. While this would seem impressive growth for almost any kind of business, as platforms go it was not spectacular. It may have been due to its very small niche of fine wines and very narrow customer segment of high-net-worth clients – unlike the mass market products typically covered by platforms – but the question remains as to how to accelerate growth. Having met all the criteria for success except that of scale, top management must consider what to do next.
This case is an example of online platform business and can be used to teach multiple topics:
(1) As an introduction to the underlying principles of online (web-based) platforms that connect two sides of a market – in this case winemakers with traders, investors, wine collectors and drinkers.
(2) To start a class discussion about entrepreneurship and the pivots made by Cru to the business model so far and its future choices.
(3) To consider different forms of expansion – here diversification vs. market expansion – and how platform businesses may have different considerations from manufacturing, brick-and-mortar retail, and even web-based businesses that do not serve two-sided markets.
- Online platform business
- New venture
- Venture growth
- Two-sided market
- Geographical expansion
- Business model
- Luxury market
- Business pivot
- Lifestyle market
- Tangible asset trading