A Nation of Winos Weep: Amazon Halts Online Wine Retail Program
Creative Commons licensed image from Flickr user protographer23
Last week, Wine Business broke the sad news that uber-retailer Amazon is ending their push into the online wine retailing space. This comes on the heels of the much quieter news that Costco.com is ending their online wine sales.
These two companies, Amazon and Costco, total $92 billion in revenue per year. They know how to sell. Both do huge volumes of sales online, have gigantic customer bases, and have the shipping logistics in place to tackle almost anything.
Except wine.
So what makes wine so hard to deal with? Why would two gigantic retailers decide that the online wine market just isn’t worth it?
Wine is kind of a pain to keep in inventory. Wine isn’t like a book. When you sell books, you enter the titles, the ISBNs, and the quantity of each that you own into your system and you’re off and running with your inventory system. If you sell patio furniture, likewise. If you run out of books, you call the publisher and get more books. If it is out of print, you scour the used book market.
Wine doesn’t work like that. Retailers have much smaller quantities to deal with, often into the single digits, leading to much faster turnover of products. Each wine is specific to the year and size of the bottle meaning that Opus One is not just Opus One, it is the 2004 Opus One and cannot be confused with the 2005 Opus One. Wine is an international product and can’t be relied upon to have a UPC attached. Retail stock must be under some sort of climate control in your stock is going to be sitting for any length of time.
All the headaches of slinging wine means that real time inventory in online wine sales is kind of a big deal. Even in this day of unprecedented ease of use in developing web applications, real time inventory is a feat few have accomplished.
I hear you saying:
C’mon, Amazon had a net income of over half a billion dollars last year. They couldn’t get this figured out?
Granted, it isn’t rocket science. In Amazon’s case, they were met with two other major factors that contributed to their decision.
They lost a major fulfillment partner. New Vine Logistics went bust earlier this year. and for some time their future was very much in doubt. I had worked with New Vine Logistics in the past, and they were among the best in the business when it came to receiving, storing, and fulfilling wine to customers. The loss of this major partner must have been crippling to Amazon.
Interstate shipping laws are just too much of a pain in the ass to deal with. The stick-in-the-mud legislators and wine distributors will ruin anyone’s day who dares try to end-around on them. Wine can currently be shipped to about 35 states but within that club there are many different variations. Some have limits on the volume, some limit the number of bottles, some limit the retail value. You read this blog, you read others that cover wine shipping, you know it is insane.
Amazon quitting in the face of all this is scary. It means that Superman stared down Lex Luthor and decided “Nah, not fighting this guy.” Sherlock Holmes did not get his man. The inmates have taken over the asylum.
So, where to now? Wine consumers have lost what could have been a major retailer using their immense size to deliver good wines, high availability, and possibly lower prices. They lose a gigantic company who may have acted like an ally in the fight to get the disaster of wine shipping laws cleared up. The liquor distributors shovel millions of dollars to make wine shipping difficult for retailers. It will take millions to defeat them. Those millions will not come from Amazon. If you’re local, you can volunteer for Marylanders for Better Beer and Wine Laws and contact your state representatives to get their take on direct wine shipping.
