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FRIDAY GETAWAY DAY
09/28/2012
Friday Fishwrap
Will Amazon Kill Local Wine Merchants

By Stephen Eliot

Sales and the state of the market have been at the forefront of this week’s internet wine chatter, and one of the more significant stories of all has been the imminent jump into wine retailing by the biggest online player of them all, Amazon.com.

Several years back, Amazon was poised to enter into the wine arena but abandoned its plans owing to issues of liability and compliance with California law that did not clearly define the role and responsibilities of affiliate, third-party sites such as Amazon.com and apparently prohibited the abilities of those sites to profit in any online sales of beer or wine. Late last year, however, the California Alcoholic Beverage Control (ABC) issued an advisory clarifying the issues and giving the green-light to third party internet sales as a way to assist California’s wineries, large and small, in reaching new markets.

According to Wine Industry Insight*, Amazon’s business model is long past the planning stage and there are expectations that the Amazon wine “portal” should be up and running within the month, just in time for the coming holiday season.

As a price-conscious consumer, I cannot help but be excited about what is to come, but, at the same, time, as a wine-lover, I do have a few questions as to how this wine impact the independent, brick-and-mortar wine retailers. I have long believed that the classic wine retailer, is among the most important and underappreciated players in real wine education for interested consumers looking to learn, and I wonder what the click-and-go buying options that have redefined sales in every imaginable commodity might mean to my favorite friendly corner wine shop.

Now, it may be that larger retailers such as Bev-Mo and the like may feel the impact the most, much in the way that Barnes and Nobles and Border’s have taken significant hits as discounted, on-line sales of books have soared, but I do worry that the smaller, hands-on wine retailers who have the time, passion, knowledge and willingness to actually talk and listen to me will have a much tougher row to hoe.

There is no question that there has been a trend of late for serious wine retailers to refine and scale back their inventories with an eye to quality and value, and I very much hope that their niches are secure and that they survive this latest round of retail evolution. Time will tell.

In the meantime, I would once again call attention to and urge support for those in the business of dealing with fine wines as something unique and special. While adaptation is a never-ending part of any business success, I cannot envision a time when clicking a link on a screen will provide that same very personal satisfaction I find when patronizing an attentive, well-informed wine merchant.

* Amazon http://wineindustryinsight.com/?p=45955


 

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Comments

Amazon
by Ron Washam, HMW
Posted on:9/28/2012 11:28:13 AM

Well, we can't know how Amazon will affect small wine shop owners, but I doubt it will affect them much. If the sales of wine on Amazon take off, and one would think they would, then the quantities of wine Amazon would need would prohibit them dealing with most of the interesting and small wineries that small wine shops depend on, and have since the likes of BevMo and Total Wine became players.

Also, Amazon is using the Lot18 model, where the licensing to ship to other states belongs to the winery, not Amazon. An awful lot of small wineries don't have the necessary permits to ship to most states, and can't afford to buy them. There are a lot of legal hoops to jump through. And then there is image. Small wineries with large mailing lists and healthy wine clubs are not going to want to be seen on Amazon.

Amazon will sell a lot of wine, but it will be the same old plonk that currently floods BevMo, bogus Wine of the Month Clubs, and the cellars of wine bloggers.

Thank You
by Samantha Dugan
Posted on:9/29/2012 8:57:51 AM

As a brick and mortar retailer I appreciate this more than you can possibly know. So thank you for taking the time to write this thoughtful post. I think Ron has it right for the most part, that Amazon will end up having the same boring crap as the big chains and won't have access to the really cool stuff but how much business will we lose while people figure that out? We've taken a few of those hits in the past few years, first with Costco, then BevMo and now Total Wine, our customers being curious and shopping those others spots before growing bored with the banal, (as is the case with BevMo) or burned a few times with private label plonk, (Total Wine) and returning to us and each one of those hits makes our business a little weaker. The average consumer doesn't know or believe that the profit margin on wine, on the retail level, is in fact very small, don't know of one small wine retailer that isn't late paying their bills and are dealing with a series of shit that is just a little broken but don't have the moeny to fix it. And yet, we still do this for the sheer love of wine and helping people discover it. Can only hope that consumers remember that....not to mention the fact that they can drink far better, and for the same price, if they trust and support their local wine merchant. Thanks again for writing this and supporting us.

Price Vs. Choice
by Charlie Olken
Posted on:9/29/2012 10:26:58 AM

There will always be people who are basically "price shoppers". Some of them are the customers of small, hand-sell retailers and those price-shoppers are going to give Amazon a look. Some will switch there; some will switch some of their purchases there; some will discover that the Internet is full of online offers, including those provided by the hand0-sell merchants who do have those limited release, special bottlings.

If Amazon succeeds, and so far it has succeeded at most everything else, it will grab market share. The question them becomes "from whom".

I am guessing that the least affected retail sources will be the great stores like Wine Country (Samantha's hang out), Vintage Berkeley, Vintage Wine and Spirits (Mill Valley) and their ilk because those stores offer both choice and service that Amazon will be unable to match.

Absolutely....
by TomHill
Posted on:9/30/2012 5:06:24 PM

Absolutely applaud your support for the brick&mortar wine shops, Steve. Most of the ones I buy from here in NM know full well that I buy from some wineries at discounts they can't touch. But I count (heavily) on them to ferret out wines I don't know about and I'm always buying those wines direct from them (at a cheaper price) than I can usually track down at retail in Calif or elsewhere.

   Like Charlie, don't see it having a big impact on the small/competent retailers. More likely will impact the grocery chains, BevMo, CostCo, and their likes.

Tom

 

I am not so sure...
by Stephen Eliot
Posted on:9/30/2012 7:07:10 PM

To all who see lesser harm done to the small retailer,

I hope you are right about who Amazon's new endeavor will impact the most. As I understand things, Amazon is not actually selling the wine from inventory but merely acting as a third party agent connecting customers to wineries for a comission fee. If that fee is less than what wineries lose in wholesale and retail markups, then what winery would not want to sign on? It is a no-loss proprosition.

I asuume the prices posted on Amazon will be discounted, then there is incentive enough for the customer to save a few bucks and not make the stop to the corner store.

I am sure that there will be some curves coming about where participation wineries can send their wines (they will be doing the sending, not Amazon), but smaller producers might be thus able to expand their markets making already hard-to-get wines harder to get yet.

Sam, I do know just how much you appreciate my musing as I spent a long time in retail way back when and recall the arrival of Bev-Mo (Liquor Barn in those days) and what it meant to small, hands-on, wineloving merchants. To this day, I believe that there is no substitute for one-on-one contact with an exciteable, irrationally devoted wine merchant who loves the stuff as much as I do. Not somms and not even wine writers...however capable they may be.

Please, do not give up the good fight.

No Subject
by Kurt Burris
Posted on:10/1/2012 11:41:59 AM

With most wine being consumed almost immediatley by the consumer I don't see Amazon having much impact on the small wine shop.  Most of the ones I deal with are't selling boxes of large production wines anyway.  I don't forsee Amazon stocking small production, niche producers these stores specialize in.  BevMo and Total wines could take a hit, but not the little guys.

Price
by Sherman
Posted on:10/1/2012 1:05:10 PM

If your customer comes to you (as a retailer) based solely on price, then they will eventually leave you when they see a better price somewhere else.

As someone with close to four decades of retail and sales experience, I know that I have to offer my customers something more than just a competitive price to convince them to do business with me. Whether it's superior knowledge, service, getting the unusual item that is far superior to the mass-produced item -- they will recognize the value in what that retailer will offer.

 

Gotta dance where the elephants aren't.

my conclusions
by Alejandro
Posted on:10/6/2012 11:44:43 PM

I have been reviewing the direct to consumer market since about 4 moths ago and for me makes perfect sense to have a market place where supply and demand meets. However, if you analize the profile of wines and consumers in the direct to consumer market you will see that average price is well above $30, this guys are not really looking for price, but for value!

Amazon already sells wine in their market place in the UK, www.amazo.co.uk, it is clear the value proposition is very far away from what any good small retailer can offer: personal advise, knowledge of the product and a warm welcome.

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