Digital Wine Ventures Ltd (ASX: DW8) shares is wobbling in early trade today after the company announced it will implement a buy now, pay later (BNPL) service. The Digital Wine share price is sitting at 15 cents at the time of writing, the same price as its close on Friday.
The wine distributor advised that its subsidiary, WINEDEPOT, has partnered with ASX listed financial technology company Earlypay Ltd (ASX: EPY). Together, they will create a BNPL service for WINEDEPOT's business-to-business marketplace.
Let's take a closer look at the news released this morning.
New BNPL service
Digital Wine's WINEDEPOT is set to launch LIQUIDITY, its brand new BNPL service, in partnership with Earlypay.
LIQUIDITY will be accessible to businesses buying wine and other alcoholic products from the WINEDEPOT platform.
The company said its BNPL service will mean cost won't be a barrier to sales, keeping its average order value high.
LIQUIDITY will be backed by Earlypay's comprehensive credit insurance. The fintech company will also provide back-end technology and operational support for LIQUIDITY.
Digital Wine CEO Dean Taylor said the BNPL service would make WINEDEPOT more appealing to businesses, as many aimed to simplify and stabilise their operating costs after the coronavirus pandemic.
Taylor said the average fine dining restaurant sourced alcoholic products from around 50 to 200 different suppliers, and suppliers often spent several days each month chasing overdue invoices. He described WINEDEPOT and its multitude of payment options as a "game-changer" for businesses and suppliers.
The agreement between WINEDEPOT and Earlypay will be in place for 3 years after LIQUIDITY's launch.
Earlypay will charge WINEDEPOT an initial implementation fee and monthly fees thereafter. The fees are said to be market-standard and not considered material to Digital Wine Ventures.
Digital Wine Ventures also advised it has scrapped its partnership proposal with Trevipay (formerly known as Multi Service Pty Ltd).
The Trevipay partnership was proposed before WINEDEPOT's launch. It would have seen WINEDEPOT providing its customers with credit as a service.
Commentary from management
Dean Taylor commented on Digital Wine's agreement with Earlypay, saying:
What attracted us to Earlypay is that they are an innovative Australian owned and operated company with 20 plus years of experience in supporting Australian businesses…
We know that credit terms are a critical element for success on B2B marketplaces and are excited to be able to partner with Earlypay to offer the Australian wholesale beverage market a much simpler payment solution.
Earlypay CEO Daniel Riley also commented on the agreement, saying:
We're really excited to support a fast growing and innovative business like WINEDEPOT as they use technology to reinvent the supply chain of Australia's wine industry. For many Australian businesses, managing cash flow is a challenge so we're proud to provide additional payment flexibility for marketplace buyers and facilitate early payment for suppliers.
Digital Wine share price snapshot
The Digital Wine share price is having a roaring performance on the ASX in 2021. Today's news may just bring it another boost.
Currently, the Digital Wine share price is up 275% year to date. It's also up a mammoth 1,400% over the last 12 months.
The company has a market capitalisation of around $249 million, with approximately 1.6 billion shares outstanding.
