As new daily deals sites arise for specialty interests, Lot18 focuses on a product that some experienced entrepreneurs are drawn to as investors. Lot 18 caters to wine lovers. Two of its fans are the founders of Quidsi, which sold its Diapers.com and Soap.com brands to Amazon in 2010 for $545,000,000.
Lot18 has raised $13,000,000 as of the summer of 2011. But the less than $1,000,000 recently raised from the Quidsi founders may be the most important round. The American wine market is worth billions of dollars and online sales currently account for only a small percentage of that market. Marc Lore and Vinit Bharara, the Quidsi founders, appear to believe that Lot18 can lead an e-commerce surge in the wine market by providing an engaging online experience.
Distribution of wine is highly regulated. This presents a challenge to e-commerce sales. However, it also creates a buffer from competition. Perhaps this is why Quidsi’s next website launch isn’t to sell alcoholic beverages but, rather, children’s toys using Yoyo.com.
With unregulated e-commerce sites reluctant to compete in wine sales, Lot18 has captured over 400,000 members in its first 9 months of operation. The company reports monthly sales of over $1,000,000. With 80 employees at present, Lot18 plans to expand. The new funding is intended to launch the company into vertical markets. In addition, to rare wines, Lot18 already offers chocolates, caviar, and coffee.