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Can the Canucks Save Winery Ecommerce?

Many would cite the 2010 Winter Olympics as this year’s greatest achievement and export from British Columbia, Canada. However, I would argue that the highlight of the year from the West Coast of the The Great White North comes from two winery ecommerce companies who are succeeding where their spiritual California forebears have stumbled.

2010 was a crossroads year for winery ecommerce.  At no point in time has the need been more glaringly apparent for wineries to wrest their customer sales destiny out of the hands of others.  Yet, seemingly, all of this year’s online innovation has been with intermediaries including the now ubiquitous flash sales sites. 


At the same time, domestic ecommerce providers in the wine value chain have been experiencing transition, opening the door to our friends from the north who view U.S. winery ecommerce as not a challenge fraught with compliance issues that require decoding, but as an easier path to growth relative to their own byzantine legalities as well as an opportunity to lead U.S. wineries through the forest of trees.

Direct-to-Consumer Wine Ecommerce

In June of this year, the former Inertia Beverage Group (now “IBG”) announced a licensing agreement with Vin65 from Abbotsford, British Columbia (BC) to use Vin65’s ecommerce and customer management platform as IBG’s standard going forward. 

“As an outsider, we can relate well to all of the other outsiders placing orders online.  I’m 932 miles from Napa and all I really want is great wine without a huge hassle.  A local Napa person can walk into a winery – I have to wade through the website, the checkout, the shipping, and deal with that experience,” said Andrew Kamphuis, President of Vin65, commenting to me on his company’s detached perspective.


With the IBG deal, Vin65 cemented their growing reputation amongst the wine and technologically savvy set that they were the new leader in the direct-to-consumer winery ecommerce space.

Not mentioned in that deal, however, was the impact Vin65 might have on the other direct sales portion of IBG’s customer solutions—Direct-to-Trade (DTT), a void that may soon be filled by a BC neighbor to Vin65.

Direct-to-Trade Wine Ecommerce

DTT is a program that allows wineries to legally sell to trade customers, at retail or restaurants, currently available from IBG in 13 states (with more states legally able to be accessed).

When officially announced by IBG in 2007, DTT was heralded as an industry game changer – an opportunity for small and medium size wineries (who have had near-term historical difficulty securing distribution in states) to control their sales destiny and get their wines on and off-premise in a compliant way, enabled by technology.

Simply, upon launch, wineries could legally sell their wine into a given states’ retailers and restaurants via ecommerce-enabled self-distribution, or legal routing through the three-tier system (read:  paperwork).  I should know: I helped put the program in place at IBG leading the Direct-to-Trade efforts under Paul Mabray’s (now founder of VinTank) leadership.

By all accounts, what the DTT system afforded in access it lacked in usage.  Wineries weren’t (aren’t?) ready to command their own sales activity.  Though efforts were made to bridge supply with demand via a marketplace at the still existing, those efforts were met with more sales potential then reality.


Shortly after leaving IBG, I talked to a wine industry insider with both technology and distribution experience who remarked, “Direct-to-Trade is a good idea, but they’re trying to solve the wrong problem.  Wineries won’t put feet on the ground to sell and it will take 10 years for the program to get off the ground.  With the venture capital money invested in IBG nobody is going to have the patience for that long of a development life.”

It was sage wisdom.  Yet, one harbinger of successful development around Direct-to-Trade that did come from IBG was a press release announcing an, “Online Wine Wholesale Platform” in October of ’09.

The premise behind an Online Wine Wholesale Platform is to attack the problem of small-to-medium size wineries now being able to access a market (yet not knowing where to sell into said market) by focusing on the small-to-medium size distributor who is as equally challenged as his wine brethren in managing cash flow and inventory. 

By turning the situation 180 degrees and giving a distributor a “virtual” inventory of wine to sell that can be fulfilled from the winery (or winery fulfillment operations) it seemingly solves the problem of winery sales effort while giving the distributor a bigger book of wines to sell with little risk in cash outlay.

That’s called a win-win.

Quoting from the IBG press release, “We expect this new model to bring a significant boost to wine distribution in the states where we are looking to launch it,” said former IBG CEO Ted Jansen

The press release continued, “By incorporating IBG’s producer clients into their wholesale portfolio, distributors can expand their product line for retailers and restaurants, giving those customers access to products which allow them to differentiate themselves from competitors.”

Since the time of the announcement in October of ’09, IBG has been quiet on the DTT front with a new stable of senior leadership who have, perhaps, different priorities, which may include pacifying venture capital investors.

Another Shot on Goal

However, filling this void in Direct-to-Trade progress brings us to the other shining star from British Columbia—Onlineorderdesk, who recently announced that their technology was going to be used as the online ordering system in Virginia facilitating sales between wine producers and trade retail and restaurants, very similar to the IBG program, with a keener focus on reporting and ease of use for users.


The specificity with which the Virginia program launched appears to be a beachhead for Onlineorderdesk who are poised to launch a larger scale Direct-to-Trade effort in the U.S., capitalizing where others have sputtered.

I caught up with Onlineorderdesk founder Kevin Blucke who was coy on his plans, but did note, “We don’t replace sales reps. or distributors.  We work with these individuals to give them the tools they need to do their job better.  We want to turn a sales rep. into a relationship builder not an order taker.  They should be focused on doing their job and making more people aware of the wines they want to focus on selling – we will give them the tools they need to do their job and the confidence that we will handle the ordering process.”

Blucke’s statement to me substantiates the press release for the Virginia wine deal where he noted, “Now that we have entered the USA marketplace, we plan to aggressively pursue other jurisdictions at the state level and the wholesale distributors.”

In other words, Blucke’s plans sound very similar to the Online Wine Wholesale Platform initiated, but never fleshed out by IBG.

As 2010 draws to a close, I’m comforted that despite U.S. progress in faddish intermediary wine sales, our friends to the north have their eye on the prize and the bigger goal – affecting positive change with domestic wineries and wholesalers.  If the question is: Can the Cancucks save winery ecommerce, the answer should be: Let’s hope so.


Posted in, Wine: A Business Doing Pleasure. Permalink | Comments (13) |


On 12/27, Andrew Kamphuis wrote:

Thank you for the shout out. 

You mention that BC companies have succeeded where others have stumbled.  I think there are still a lot of great ecommerce companies in California (and other parts of the world).  In the Napa backyard new competition continues to crop up (just watch companies like Design Vineyard push the bar) and companies like Nexternal and eWinerySolutions appear alive and well.

I’m excited to see companies like Online Order Desk from British Columbia expand and sell in the US.  They’ve been doing well up here for quite awhile.

As the technology gets better and better, and as competition continues, I think the real winner will be the wineries themselves.

Can Canucks save winery ecommerce?  I don’t think it needs saving.  It’s alive and well and continues to grow.

On 12/27, Paul Mabray wrote:

I think that the Maple Leaf team’s have had a great opportunity to draft US innovators but more importantly, take that advantage and really capitalize on it for pushing the boundaries of wine ecommerce.  We are huge fans of Vin65 (disclaimer, they are friends, clients, and people we greatly respect).  I expect more surprises from the teams up North in 2011. 

In regards to DTT - I really believe this is a key channel for wineries and only two main companies (IMHO) provide the strongest solutions for the US market - (albeit a bit dusty due to company focus) and (a skunk works project from 1-800-Flowers).

Great article as always my friend.

On 12/27, Josh wrote:

There’s a reason not much play has happened with DTT—the program as originally presented is not what it ultimately evolved into with implementation.  We were told we’d have partners in the field—because that’s the missing piece that small wineries need the most, especially in the current race-to-the-lowest-flash-sale market of today.  I was not privy to all of the internal conversations that took place with the DTT program, especially once Paul had left and IBG continued to expand its client base, but as with the company itself—and the general vendor landscape IMHO—what had initially been structured as a partnership in getting wines to market, helping us with people selling in those DTT states, became only a pass-through system, a helpful one, admittedly, with clearing the compliance hurdles, but not what had originally been presented if not envisioned.  Definitely disillusioning…

On 12/28, Paul Mabray wrote:

Josh - thx for the kind comments. Tomorrow I will tell share my thoughts and stories behind the success and failures of the notion of DTT. My expose if you will. Looking forward to sharing.

On 12/28, Thomas Pellechia wrote:

As one old sales rep on the street a number of years ago, I’m curious: how does DTT put a halt to reps having to be order takers?

On 12/28, Richard Shaffer wrote:

Wine is an experiential product and what small suppliers need is feet on the street pouring wine for buyers, telling the stories of the people and places behind the wines, and building relationships. So, to date I’ve sought fewer, deeper trade relationships I could manage, and am just now about to (hopefully) add a dedicated “rep” in CA and perhaps elsewhere.

I have actually had some success with virtual trade tastings with buyers and want to grow that in 2011. would love to hear how/if others are approaching this (i.e., samples provided, then tasting occuring via conference or skype etc)

I tried a wine samples/vials program to make this more efficient but frankly the wine tasted like licking the inside of a soda can and it scared me off. Maybe the technology is ready for me to try that again though.

Great post, as always. Lots to think about!


On 12/28, Paul Mabray wrote:

Josh and Thomas - I hope the next few paragraphs answer your questions about DTT (which I think is still part of the future for the wine industry for wineries, wholesalers, and retailers).  Also for everyone else, please pardon the rambling and possibe spelling and grammatical errors - trying to type while hanging out with my four year old.

Inertia was founded to “bridge the gap between wineries and their customers using the internet.”  By customers we meant consumers, retailers and restaurateurs, and even wholesalers.  Direct to Trade (DTT) was always part of our business plan and became a living breathing entity 8 months after Granholm and 3 months after the epic Costco case. 

The reason was a result of the market’s continued request for it and statements like below from wineries:

>>I can’t get a wholesaler in “X” state.

>>My wholesaler will carry my chardonnay but not my tempranillo and I have accounts looking to buy it. (insert any varietal/format combo here)

>>My wholesaler only services the major metropolitan areas in that state and I have requests from trade buyers in remote areas to buy my wine.

>>I know and service all my accounts in “X” state and I don’t value the relationship with my wholesaler who is not even replenishing orders.

From the trade (restaurants and retailers) we heard:

>>I wish we had a better selection to choose from than what is on quota from the wholesaler this week.

>>I want to order at my time, not when the rep comes to visit.

>>I want a direct relationship with the winery.

>>I know what I want to order, just give me a way to do it via the Internet.

>>I want wines that don’t have a huge markup from the wholesaler so I can give better deals to my customers without the price inflation caused by regular market dynamics.

With that we embarked on a multi-million dollar effort to enable wineries the ability to sell direct to restaurateurs and retailers over the internet.  The problem with being first is that everything is invention, not emulation.  Our model was the equivalent of 5% for Inertia, 2%-4% paperwork fees, and shipping (common carrier).  Wineries over $20 SRP still made more than selling to a wholesaler.

The launch of DTT in New York (typically a tougher market for CA wineries) was the explosion heard through the wholesaler industry and more like a pop-gun through the wine community.  We had over 600 wine brands on our platform and only 5 participated in the launch.  Wineries, still gorged by the continual growth of the market, decided to wait and others, not sure of what this would mean for their wholesaler relationships (which in NY were ZERO for the wineries we requested), also decided to wait on the sidelines.  Everyone said, “let’s wait to see how it plays out.”  With few exceptions, the wineries that did participate were virtually unknown brands, with no winery infrastructure, and no sales team.

Trade accounts also started throwing up friction:

“We don’t use credit cards (a myth that took lots of case studies to disprove).”

“Come back to me when you have a real selection (quantity and known brands).”

“That’s great, but now I have to go to 20 different websites to order the wines I want.  Don’t you have a 1 stop shop?”

“Can I get samples?”

“Since the wholesaler is gone, shouldn’t I be able to buy FOB?” - this one was hard as well since they didn’t account for other channel costs and it took quite a lot to explain those mechanics.

(Josh, this may answer your question best) - the LAUNCH intent was to enable DTT on a wineries site and they would have that pass through ability to sell via their website.  We would have solved their problem of the original challenges.  However, with the launch of DTT we quickly realized we needed to accelerate Phase 2 of the program - create catalysts to stimulate demand.  We had lot of activities - catalogs, market visits, leveraging wholesaler and broker partners, events, cooperative sales efforts between wineries, telemarketing.  Our sales team heard about tomorrow, and sold it like it was today.  They were chastised extensively but had inadvertently opened Pandora’s box.  Now it was about making the program perfect for the market to serve all their needs as opposed to just making it work perfectly.  Initiatives to execute all those tactics began immediately some with success, some with failure but again, it was all new to everyone participating.

Now please remember, in the myriad of all these hopes and dreams we faced continual attack from wholesalers, regulators, and even partners who failed to live up to their obligations and required constant fire drills.  Combine that with also onboarding wineries (and the effort it took to educate them not only on DTT but in e-commerce in general), internal staff and teaching them either wine (not wine appreciation and knowledge but hard core wine marketing and operations) or tech (both skills rarely exist in employees) and BRUTAL Venture Capital pressure to launch as much of the US at the same time forced us to juggle 1000 balls at the same time.

Economically we could not give enough resources to focus on any single brand (the 5% equivalent just doesn’t cut it).  The model, now morphed, was between a rock and a hard place.

Andrea Johnston is owed the credit for the evolution that became  She insisted on a single destination site that we could focus all our resources for sales and marketing dollars.  She re-engineered the winery fees to help off-set the cost of creating demand, tightened up the operations and she changed the targets to ensure its success.  However, at that point the VC’s were in charge, a new CEO with a different vision joined the firm, and I left to start VinTank.  The subsequent execution of was not the excellent plan that AJ created but it still resulted in one of the only two viable alternatives to the traditional wine wholesale business. 

Suddenly, with the advent of this recession has “old become new again” and wineries are reexaming Direct to Trade with both Inertia’s site and  I know it works.  I have seen it work extensively but it requires work on all sides of the equation.  Direct to Trade site are like any long tail site.  Not all products sell a lot, but a lot of products sell a little.  Direct to Trade was never meant to replace 3 Tier, but to augment it and replace it in markets where it makes sense.  DTT will never replace wholesalers for short tail SKU’s, it doesn’t have the economics or “on the street infrastructure” to support those types of brands.  However, for long tail products (which 85% of our industry is), DTT is a real vehicle to possibly sell your wine via that site and at the worst, get access to a market for you to sell the products yourself; something that was not available until this channel existed.

On 12/28, Paul Mabray wrote:

BTW - I look forward to Kevin Blucke’s foray into the US market.  Servicing one customer (VA) for one market is very different than servicing an industry.

My bet is on 1-800-Flowers with (which was built by so that Canadians still are partially responsible coming to the rescue).

On 12/28, Kevin wrote:

Jeff & Paul, thanks for shedding some light on the DTT situation.  It seems to me that the best tact is less creative, but hopefully more effective: build a direct salesforce and sell a virtual inventory.  In other words, act just like a normal distributor selling wine door-to-door, but never take ownership of the wine.  This solves the slow moving inventory problem associated with long-tail wines(assuming wineries will underwrite the inventory risk) and puts the sales incentive in the DTT firm’s court, not a 3rd party distributor’s. Moreover, with a web-based ordering (and re-ordering) system, each sales rep responsible for a territory can service more accounts with less touch, all while increasing the lifetime value of the trade account customer via repeat sales. I think of it as almost a hybrid approach, half “plain ol’ wine sales rep”, half eCommerce. I know IBG was doing some of this, and my proposed model might be harder to scale, but I think hoping someone else will sell an unknown brand enabled by a DTT system is a tough proposition.  IMHO, a direct salesforce aligns incentives and allows the DTT firm, as the wholesaler, to get up to the wholesaler’s price point (i.e. more margin wiggle room for better economics).

Just my two cents—I know you guys are closer to the fire than me.  Hope you had a nice Christmas.

On 12/29, Kelly wrote:

DTT is not going to replace the sleas rep on the ground, hopefully it assists their often thankless task. The Wine Industry is about people, not wine.

On 12/29, Thomas Pellechia wrote:

Kelly, your typo is funny.

In any case, if memory serves, the majority of retailers in New York State that I used to visit on my daily rounds wouldn’t lift a finger to place an order unless someone was standing nearby prodding them.

Until the commodity aspect of wine in retail shops is altered, I don’t see DTT as a potent order-taking device, at least not in this state of Byzantium—New York.

On 12/29, .(JavaScript must be enabled to view this email address) wrote:

Does anyone at Inertia have a wine sales background?  Yes, they got it wrong with the initial DTT program but it looks like they are doing it again.  If the new idea is to offer the “book” of participating wineries to distributors to augment the wines they already represent, I don’t see it working.  Sales reps already have too many wines to sell so why do they need more?  Plus, the Inertia brands are not exclusive, so the order would go to any sales rep who suggests it.  I’m sorry, I don’t get it.

On 12/29, Paul Mabray wrote:

Kelly - our industry is both people and wine.  To say it is only people is myopic.  Book stores, travel agents, and shoe stores used to say that those products were people industries and Amazon, Expedia and Zappos proved them wrong.

Kathy - I don’t know if anyone still has wine sales experience but we used to have a heavy team of wine industry veterans. I am no longer affiliated and I can’t speak to their current strategy but they do have many exclusive wines.


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