U.S. buyers like online wine discounts, but not shipping costs
U.S. consumers are increasingly using the Internet to obtain information about wine, but according to a recent survey, this is not yet translating into sales.
There has been a steady rise in the Internet’s influence on the U.S. wine market since 2011, according UK-based Wine Intelligence, which conducted an online survey of 2,227 wine consumers in the United States. Forty-one percent of those surveyed stated that they use wine merchants’ websites, and an additional 37% said they utilize newspaper or magazine websites for wine information. Thirty eight percent said they use social media to get updates about wine discounts and promotions.
Roughly 11% of survey respondents said they shop for wine online, citing the relative ease of buying online and the variety of discounts and promotions in comparison to brick-and-mortar retailers. Although low, this figure has more than doubled since 2011.
Internet searches for wine information do not translate into sales, according to Wine Intelligence analysts, because of the “convoluted and restrictive legislation surrounding liquor sales at the state level.” The report also finds, “America’s bricks-and-mortar retailers remain quite effective at fostering and maintaining strong personal relationships with their customers.”
This can be a mixed blessing. Molly Rubinstein, sommelier at San Francisco’s Petit Crenn, and distributor for Northwest Wines, said that although consumers “still put a lot of stock in having the sommeliers or wine merchants giving them recommendations,” they will use search tools to find better prices on the Internet. “They will thank the somm for their recommendations,” she said, “but will then leave and purchase their wines online.”
While Internet sales account for only about 3%-4% of total wine sales by volume in the U.S., “It is a very fast-growing segment of the retail market,” said Marc R. Kauffman, consulting sommelier and wine advisor for the winemaking reality TV show and e-commerce site “Best Bottle.”
“The wine business is very traditional,” he added. “Many wineries still do not have effective Internet websites or winery sales platforms.”
Breaking Down Barriers
For Internet-based sales to grow, said Wine Intelligence research director Juan Park, it would require legislation to make online purchases simpler and straightforward, as well as reduced delivery and transportation costs. “Consumers are hardly going to spend extra money on a regular wine they can find in a shop when there is an extra delivery cost and an extra delay as to when they can access the wine,” he said.
“A mixed model such as ‘click and collect’ could be the best of both worlds – online efficiency and access to information, but with speedy access to the goods purchased and no extra delivery cost.”
The click-and-collect e-commerce model originated in the UK, and U.S.-based businesses are now experimenting with the concept. Consumers purchase retail goods online for pickup at a specific outlet. This could be a store, but also a warehouse or so-called “dark store” – a location designated for customer pick-up only.
In late August, Amazon announced that it is testing a new “Prime Now” service that will deliver wine to Seattle buyers within hours of purchase. One-hour deliveries are priced at $7.99, but two-hour deliveries are free.
Getting More Buzz
Direct-to-consumer sales remain the bread-and-butter for U.S. wineries. “If there is such a thing as a ‘typical winery,’ the majority of a winery’s DTC (direct-to-consumer) sales are done in the tasting room and through wine club shipments, and 80% or more of wine club sign-ups occur in the tasting room,” said Jeremy Benson, executive director of Free the Grapes! “Therefore, the majority of winery DTC sales are driven by tourism, not the appearance of the Internet as a new sales channel.”
Most wine professionals say the Internet is nominally effective at helping wineries get product buzz. It works best for promoting limited-release wines and those not available through retail channels. Rubenstein said wineries promoting seasonal wines, such as rosés during the summer and spring, find it “gets the consumer in the right spirit and open for sales.”
The Internet and social media are benefitting wineries in building brand loyalty and credibility, and in providing great customer service, Benson said. In addition to tourism trumping technology, most wineries produce less than 10,000 cases, which means they “need to pick and choose the states that make sense for their marketing and sales plans, just like they do with 3-tier sales.”
Internet sales will continue growing, Kauffman predicts. Wine consumers reaching legal drinking age, who grew up with the Internet, will become online wine buyers. “Eventually,” he said, “the Internet will be a primary source for winery information and sales.”