E-business Briefing: September 2008

Snooth, launched in the US last year, is a social wine recommendation and price comparison site which aims to be the world's largest wine site.

In the same way that Last.fm helps you discover new music, Snooth recommends wine to users based on the bottles that users with similar tastes enjoy.

We caught up with Snooth CEO Philip James to talk about the site...

Tell me about Snooth...

It's basically a price comparison shopping site for wine. The difference with Snooth is that there are a lot of features on the site that are specific to wine.

We track inventory from 11,000 wine producers and merchants in 50 countries, mainly in the US and UK. The aim of the site is to help you discover new wine or track down a wine that you have been looking for.

Users of the site can search for wines in 10 different countries and see wine merchants and prices for their local area.

As well as the shopping comparison part of the site, we have a lot of community based features designed to keep wine lovers engaged.

There are other wine sites out there, such as WineSearcher.com, but no other site does what we do in pulling together the amount of wines and prices and providing the review content and social network around it.

Has it been difficult to get enough reviews on the site to make it worthwhile for users

We have managed to get a decent amount of reviews - we now have around 2m reviews on the site, but there are around 1m wines listed on Snooth so, while some popular and well known wines will have several ratings, for more rare wines there may be less user feedback.

What we did was to make sure there was some information around the wines we list, so we have given power to the wineries to provide tasting notes for the wines and upload awards and commendations. We have also partnered with wine critics to add their reviews to the site so that users have plenty to help them decide on the wine they want.

How do you ensure that reviews left by users are genuine?

We have a measure called Karma, and this is used internally to determine how reliable users and their reviews are. We look at how long accounts have been open, how many forum posts have been written, and look for any unusual patterns.

This Karma score is used internally but other Snooth users can look at reviewers' profiles and their 'trophy case', which shows how many reviews they have left, forum postings etc. 

How do your recommendations work?

Once a user has left five reviews of wines on the site, we can start to build a picture of their preferences and show them other wines which they may also appreciate. We first identify the user's nearest neighbours, who have enjoyed the same wines, and use their profiles to recommend wines.

It works in a similar way to Amazon's 'people who bought this also bought...' system.

We also recommend similar wines when users visit a page for a particular bottle, though these recommendations are based on similarities between grapes, taste and regions, not user behaviour on the site.

What kind of feedback have users given about recommendations

We have had some basic technical issues, where wines that were recommended were not in stock in their local area, which can be frustrating for users. Many other recommendations have been successful though, and we have had plenty of positive feedback from users.

Are there any challenges associated with creating this kind of site for wine, as opposed to electrical goods for instance?

Anything that people are passionate about, like wine or music can be tricky to classify and recommend and can polarize opinion. The site is about discovery, and people are increasingly OK with that, it helps get them out of their comfort zones and nudges them to try new things.

How many users does the site have? How fast is it growing?

We have around 300,000 unique users per month at the moment; this has built up from around 100,000 at the beginning of the year. Our monthly growth rate is about 25%. We are hoping to reach 600,000 users by the end of 2008, and 1.25m by 2009.

Are most users US based?

Yes, the split is about 60% US. 40% international. About 5% of users come from the UK.

Who are the typical site users?

The average wine drinker is 35-55, so people using our site tend to be older than, for instance, users of music sites. There are fewer people buying wine than music online but they tend to spend more.

In the wine collector market, people are more likely to buy online, but we have a range of prices to suit all users - the average order on Snooth is $180 for a case of 12 bottles.

How does the site make money?

We have affiliate deals with many of the merchants and wineries that display their stock on the site.

So not all merchants are paying you commission?

No, though we do give better placement to those that we have deals with. When we started the site, we wanted to get it to critical mass as quickly as possible, and this meant getting as many wines onto the site as we could.

What are conversion rates like on Snooth?

For users that click through to wine merchants' sites, the conversion rate is roughly 8%.

Is Snooth profitable?

Not yet, but we have been focusing on building the site so costs are higher at the moment. We are also expanding our staff. We have a team of six working on Snooth at the moment but hope to expand to 15 by the end of the year.

How are you funded?

We have had two rounds of funding so far, raising a relatively small amount so far. We raised $1m in angel funding at the last year, and had an earlier round of $300,000. We are currently looking for a Series A round of funding to help us expand further.

Any plans for mobile?

We are developing apps for both iPhones and Blackberries which will allow people to use Snooth when they are out shopping and need to by a bottle of wine for dinner. We will offer local results by postcode search.

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