The Tannico case
Increasing the offer and availability of products with a courageous and sustainable strategy.
Tannico is the largest Italian wine shop in the world. Founded in 2012 by Marco Magnocavallo, today it represents excellence in the field of food-tech, with more than 1.5 million bottles of wine shipped worldwide in the last year and thousands of satisfied customers, not only by the number of high-quality products but also and above all by the exceptional customer service. Tannico is the company in the food-tech sector that has amassed the largest investments in Italy, a further confirmation of this business project’s value.
A new model in the wine industry
One of the reasons behind the success of Tannico is undoubtedly the ability to offer a vast catalog of quality products, about 15 thousand SKUs to date, with unbeatable delivery times of half a day in Milan, 24/48 hours in Italy and 72 hours in 19 countries around the world. The factors behind this winning model are vision, courage and a constant focus on technological innovation.
2018, a new challenge: expanding the product offerings with even faster shipping times
When we met Cristiano Pellegrino and Anastasiya Belkina in 2018, IT Manager (and co-founder of Tannico) and Data Analyst respectively, the company’s success story was already well known. However, the company was looking for solutions to consolidate its leadership in the market by improving its strengths: the catalog size and the number of in-stock products available for immediate delivery, for which Tannico can guarantee customers extremely short shipping times.
The company had planned significant investments in inventory, but at the same time, it was looking for a technological partner to help them maximize the return. The new inventory management strategy had the purpose of reducing the out-of-stock for the most popular products, especially during seasonal peaks, with clear limitations to the acceptable extra-stock to not worsen sales performance and margins.
“The secret of growth was to guarantee, for more and more products, the quality and delivery times for which our customers appreciate us and choose Tannico every day.”
In 2018, there were approximately 10k active SKUs, grouped by several product categories that represent the overall offer of the wine shop.
Tannico’s products naturally have strong seasonal patterns, which have been detected during the data analysis that Intuendi performed as the first step of the collaboration. The market dynamics and the constant growth of the company have brought to light other factors of impact for both past and future sales: special calendar events (such as holidays and Black Friday), a great number of promotions offered to customers, the increase of the catalog size and, last but not least, the out-of-stock events that occurred in the past that certainly had a negative effect on sales and customer service.
The solution identified by Intuendi to support the new growth phase has been an advanced demand forecasting avanzato, combined with a top-down forecasting strategy and a data representation designed to manage one of the peculiarities of the winery product, namely the management of the vintages belonging to each label. The forecast generated through intuendi.com, based on an Artificial Intelligence engine capable of selecting the best predictive model for each product and correlating it with the causal factors that impact demand, has been used by Tannico’s buyers to determine the optimal stock quantities to meet customer demand with respect to the service levels required by the company.
“Our buyers use Intuendi every day to estimate inventory needs, so we know what and how much to buy to keep our standards high and make customers happy”
The analysis of the performance showed a 36% reduction in the (mean) forecast error compared to the methods previously used, already during the first months of platform usage, calculated on the entire catalog which includes -as for all eCommerce businesses- a great number of long-tail products. The evolution of Intuendi’s AI models and the introduction of the causal factors allowed us to reduce the absolute error by a further 62% during 2019, with best performances that reached a 3-units mean absolute error over a cumulative period of 4 weeks.
The gain obtained by adopting intuendi.com as the Demand Planning tool is reflected in the growth recorded by Tannico during 2019 compared to 2018.
The investments in inventory, with a catalog size growth from 10k to 15k SKUs, resulted in 89% units in stock more with respect to 2018. However, this investment has been rewarded by the increased availability of products ready for delivery from 88% to 94% and by a more than proportional sales and margins growth.
These numbers demonstrate how investments in inventory, combined with better planning processes, have enabled a more efficient and larger-scale purchasing activity, rewarded by the end customer’s choice who can access to an even wider offering and a constantly improving service.
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