Friday, October 26, 2007

Buying Wine Online - Part 1

So, I recently read that approximately only 1% - 2% of all wine sales come from online sources, with Wine.com heading the pack at ~ $34 mil in sales. Also, California accounts for a whopping 46% of all online wine sales. Interestingly enough, high-end wines (i.e. greater than $20) accounted for 93% of all sales...WOW!

Although these may seem to be somewhat a significant numbers, it occurred to me that something is askew with this market. Then I began to explore my own online buying patterns and quickly discerned that I rarely, if ever, buy wine online. And, have little interest to change this or do so anytime soon. Hmmmm........

Now, I consider myself fairly schooled about my wines (just enough to be dangerous)...so why am I not buying online? Is the general lay public more likely to purchase wine online and my little knowledge about the market actually keeps me going to the local wine shop instead? What are the main reasons someone would even prefer to purchase wine online over the local market or wine shop? What are people buying in the first place? The data out there for this is scarce at best, and only presents some estimations of why people buy wine online.

Here's my theory in (random) top-10 form:

1) Availability. Often times, people cannot find certain wines in their area and can easily plug a brand in to a search engine and quickly access multiple places to purchase a hard-to-find wine. They are willing to pay the extra sometimes for the sheer availability of a brand.
2) Value. People that know what they want, compared prices, and how much they are willing to pay for a certain brand, can often find deals online that justify the extra shipping expense. A pure money decision for prudent shoppers.
3) Convenience. Certain people just do not have time to spend at the local wine shop or staring at the wall of wines trying to decide which one they'll like. They're willing to 'roll the dice' a bit for the convenience of point and click shopping and trust the basic rating system to carry them through. Plus, a lot of times you have more information about the wines than at the local grocer or market.
4) Referrals. Either they got directly referred to a wine or online store from someone who has had a good experience, and trust the source for making the leap to purchase online. Enough of the fear factor has been removed to get them to act.
5) Wine Clubs. I personally believe this is a very strong source of a lot of wine sales online. It provides convenience, variety, value and trust altogether that these wines have been chosen for a good reason. However, this is not always the case and can lead to suspect wines ending up your way...uhem...unknowingly.
6) Wine Auctions. My personal favorite, but not for weak at heart (or market dabblers). You really have to know your stuff here and be willing to do your research as well. Not to mention, sometimes deep pockets. However, you can pick up some great deals if you REALLY know what you are looking for.
7) Food & Wine pairing sites. Several sites that do a decent job of food and wine pairing will often suggest specific wine(s) to go with the recommendation or recipes described, and then have the ability to purchase that wine directly. (I actually like this...more on this later)
8) The strict ratings buyer. These are buyers that hold ratings (or they're favorite critic) to a premium, and whatever is rated at 'x' or above is gospel.
9) The Wine Spectator (WS) effect. This usually comes about when WS comes out with its Top 100 list and people rush to buy the latest and greatest value or rated wine from this list so they can claim, "You know, this one was 24 in the WS Top 100...blah, blah, blah..."
10) The Lucky 20-something states. You're lucky enough to be in one of the U.S. states where you can legally ship wine. This opens up more avenues to buy directly from wineries or sites. I think at last count, it was in and around 26, but I am never sure about this as it changes often.

So there you have it. Next time I will talk about why I believe the system is missing the boat with online wine sales and provide a few ideas of how to better capitalize on the huge market potential in years to come.

Until the next sip...swirl ya' later!

JM

1 comment:

Paula said...

My husband and I always buy our wines online from sites such as Majestic Wine as it is very convenient and the selection is far superior to what is available in the local supermarkets.