Good Grape Wine Company

August 16 2007

The Future of Wine Retailing and Why You Should Care

When is Amazon.com going to tilt the wine industry?  It might only be a matter of time. 

Some background:  Like most readers of Fermentation, I read Tom’s posts on the state of wine shipping in general and wine retail shipping in particular with a mixture of curiousness and fascination.  Tom, by virtue of his post as Executive Director of The Specialty Wine Retailer’s Association, has an opportunity to see with a level of depth and insight both the intriguing ongoing changes in wine shipping laws as well as the complete and utter confusion when lawmakers and subsequently regulators don’t seem to “get” the same things from the Granholm rulings that the rest of us have come to understand.

But, like a lot of my wine blogging brethren I’m sure, I’ve looked at a lot of this purely from the winery perspective—if the winery can ship to a consumer and that wasn’t possible before, that must be a good thing.  I kind of lumped Tom’s perspective in advocating for retailers into a separate mental category—something along the lines of “too bad for them, but my own interests are served so I don’t care too much.”

Shame on me.

Anybody with a blog, or that reads a blog, or that has ever bought wine online should care about the ability for retailers to ship wine just as wineries and here’s how I came to this conclusion and why you should care, too:

First, let me say that all of the conversation online about Winelibrary.tv and Cork’d, tasting note sites and online wine commerce pales in comparison to the opportunity that exists for an 800 lb gorilla to enter the market—the proverbial rising tide that raises all ships.  That gorilla or the rising tide is Amazon.com, and anybody with a blog is the ship, but I’ll get to that in a second.

Lenn at Lenndevours has a New York Cork Club wine club that he does in conjunction with a retailer—Lenn picks the wines and The Greene Grape Company does the logistics and the shipping.  It’s unfortunate that Lenn couldn’t secure his own wine retailing permit and run this enterprise himself.  He has cultivated a following, people trust his opinion related to New York wines and there’s nothing wrong with providing a good service to paying customers.  And, besides, this blogging thing is going to merge with commerce sooner rather than later, it just makes good sense.  You have a niche book seller for every genre and soon, perhaps, there will be the wine equivalent.  Gruner Veltliner aficionado’s rejoice. 

If you’ve poked around this site you’ll note that I have a super-charged Amazon.com store embedded in my site.  I use a little bit of programming help from a third-party, but Amazon.com also offers this same ability with an affiliate program called aStore.

So, imagine if Amazon.com got into the wine game—every wine blogger, easily and simply, would have the ability to create a wine shop, specify the wines they want to focus on based on available inventory from Amazon.com and tailor their offering to their audience—Perhaps I might focus on Midwest wines—those from Michigan, for example.  It’s no skin off my nose, I don’t have to own the inventory, and I just take a small commission for bringing the customer to Amazon.com. 

This is the easy entry way for Amazon.com—perhaps they overlay or acquire a wine retail company, don’t manage any inventory and just pass the order down the chain to a company or subsidiary that owns the logistics for a good number of states—there a lot of these guys out there, by the way—Geerlings and Wade comes to mind.

Or, perhaps, even more intriguing is the fact that Amazon.com, according to this recent New York Times article, is continuing to expand its “Fulfillment by Amazon” program—a program whereby:

(the) program is designed to allow independent sellers to use its network of distribution centers to store and ship their products, according to Jeffrey P. Bezos, Amazon’s founder and chief executive.

The program is part of a broader set of tools called Amazon Web Services, an effort by the e-commerce pioneer to rent out complicated parts of its infrastructure to smaller companies that might benefit from its hard-earned expertise, and who will pay for the privilege of lightening their workload.

Simply put, with distribution centers across the country and more likely to come in ongoing expansion, Amazon.com could, with some marginal effort, turn itself into one of the largest wine distributors in the country present in twenty states, selling through a band of online wine shops—you, me, the next guy with any fecundity.  Presuming I can be licensed as a wine retailer in my town, I could be in business with Amazon.com managing all of my logistics. 

This is truly the Longtail theory come to life.  Amazon.com could pick up inventory from any winery or importer and be in complete business, allowing me to craft an online sales presence around any niche in the wine industry in a heartbeat.

You could, too. 

So, why do you care about retailers being able to ship wine?  You care because Amazon.com (and others) have the infrastructure and wherewithal to turn the three-tier system upside down.  No longer will we be lamenting the availability of wines in our states, we’ll be busy buying wine that was previously unavailable and also, and more importantly trying to sell wine to a growing audience into an ever growing expansion of niches.  Next to wine porn is the only other thing I can think of with as large of an expansion of individual specificity and, well, we know how well porn does on the Internet.

The clock starts now.  I give Amazon.com less than two years before they jump into the fray and when they do the game immediately changes.  Because of this, I now care deeply about Tom and the Specialty Wine Retailers Association fighting the good fight allowing wine retailers the ability to sell and ship into as many states as possible.  You should, too. 

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