In this era of mobile ordering and same-day delivery, beverage alcohol retailers of all sizes are asking how e-commerce can help them grow their wine business online. At a session titled “Wine Retail Goes Digital: How to Navigate the Move to E-Commerce” at Vinexpo in New York City on Monday, March 2, panelists discussed what it takes for a retailer to successfully build an online business. The panel was moderated by Anna Klainbaum, the senior digital editor of SevenFifty Daily, and featured Ian Griffith of Beverage Media Group’s Bevsites e-commerce platform in Cambridge, Massachusetts (a strategic business partner of SevenFifty), Rajesh Khurana, e-commerce and marketing director of Westchester Wine Warehouse in White Plains, New York, and Gary Wartels, the owner of Skyview Wine & Spirits in Riverdale, New York.
The panelists discussed all facets of alcohol beverage e-commerce, from integrating point of sale (POS) systems to shipping logistics to promotional strategies, and all agreed that the market has become more complex and competitive—and harder to navigate—than ever before. Still, the message was clear that retailers who aren’t incorporating some form of e-commerce into their business could be missing out on untapped sales opportunities.
A Growing, But Underperforming, Segment
Griffith said that the industry is grossly underperforming compared to its potential when it comes to online sales. “Consider Casper, Warby Parker, Dollar Shave Club—these are all billion dollar companies, in industries much smaller than wine,” he said. “The percentage of adoption of e-commerce in wine is tiny. The adoption rate of e-commerce is 12 percent for razors, but less than 4 percent for wine. Wine is a $70 billion category, yet only 4 percent is from e-commerce…there’s a lot of opportunity.”
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The fastest growing channel for retail is grocery, he said, where Amazon-Whole Foods, Kroger, and Target are playing. “The second category for retail is alcohol marketplaces—the Drizlys, Thirsties, Vivinos, Minibars,” he said, where consumers shop on a site that displays inventory from a range of participating retailers. The third and most substantial category for retail is traditional alcohol retailers with their own branded website. Direct to consumer (DTC) is a fourth channel within wine e-commerce, though those sales are generally through a winery, not a retailer, and shipped directly to consumers.
Rabobank’s 2020 Alcohol E-Commerce Playbook reports that overall U.S. online alcohol sales across all four channels reached $2.6 billion in 2019, growing by 22 percent year-over-year, with the “old school” online liquor store channel—the brick-and-mortar shops with their own sites—estimated at $1.1 billion.
This category of online retail shops is still the largest and most legitimate business, believes Griffith, even though the regulation of the three tier system has kept it relatively fragmented. “A lot of opportunities are being stymied by regulation and the challenges of interstate shipping,” he said. “The recent Supreme Court decision in favor of retailers was positive; retailers really should have more opportunities to ship into more states in the future as this decision makes its way through the courts, and hopefully this will help them take advantage of this underperforming opportunity.”
The Decision to Sell Online
As the owner of a destination shop offering one of the largest selections of kosher wine in the U.S., Wartels noted his potential for strong online sales is due to his specialization of a niche product category. When he bought the store in 2005, it already had an e-commerce presence with Bevsites. Working with a wine e-commerce provider is still the right move for Skyview, Wartels believes, even though some mid-size retailers might consider building out their own custom platform in-house. “The e-commerce vendor does the bottle shots, inventory uploads, and offers tech support,” he said.
A strong online presence can help retailers appear a lot larger to the outside public than they may be. Khurana launched Westchester Wine Warehouse’s website in 2010 with an e-commerce provider. “I was amazed by all of the orders coming in from other states,” he said. “That was an eye-opener for me. The New York market has access to so many wines that other markets do not.”
The panelists discussed the many considerations that owners should weigh before moving into e-commerce, from staffing needs, to hiring freelancers, to marketing budgets, to shipping and local delivery logistics.
Getting Up and Running
Translating your POS inventory into a real-time online shop takes some finesse, and a great deal of attention, the panelists all said. “The accuracy of a retailer’s online listing is going to depend on what’s sitting in your POS system; keeping inventory fresh and updating that is critical,” explained Griffith, who said that Bevsites offers over 30 integrations with different POS systems. The information must be organized, accurate, and ready to push out up-to-date product information to your e-commerce website.
“Another useful thing to know is which items you want to sell online,” said Griffith. “You may want to remove allocated items that you don’t want cherry picked off your website.”
The POS is the most critical piece to manage in order to have your website operate well. “Otherwise, you will chase orders for items you don’t have, or you will be shipping the wrong bottle or vintage,” said Wartels.
The Customer Service Aspect
It turns out that customer service still accounts for the majority of a retailer’s time, even for e-commerce. To provide a good e-shopping experience, checks must be put in place from the moment the retailer receives the order until the moment it is shipped.
“Confirm the facts,” said Khurana. “Check if you can ship to that state, check inventory, vintage, bottle size, pull the stock off the shelf, put the order together, generate shipping labels, and do one last check to validate correct shipment.”
At Skyview, Wartels often picks up the phone to confirm e-commerce orders directly with customers. “They appreciate it, and oftentimes they add to the order,” he said.
Shipping regulations are a hot topic among alcohol e-commerce retailers, with state-by-state restrictions, many of which are being challenged in court, making it almost impossible for retailers to stay fully informed.
Expectations around delivery are a challenge, too. One of the biggest changes the panelists have seen in the past decade is that people are expecting wine delivered within a 24 to 48 hour timeframe. “It’s the Amazonation of our industry,” said Wartels, who employs a full time person at Skyview to hand deliver orders across the New York metro area in a company truck. Westchester Wine Warehouse, by comparison, has contracted a delivery service to handle all local deliveries.
Marketing Your E-Commerce Site
While a vendor can automate much of the e-commerce experience—the display of products, shopping cart functionality, checkout flow, and even some of the marketing tools—communicating the shop’s brand voice in a way that drives traffic is as essential as it is difficult.
There’s a growing need among wine retailers with e-commerce sites to have skilled content creators, noted Griffith. Owners should have a plan in place for marketing the site once it’s up and running, even if it means taking a qualified staff member off the sales floor for half of their shift. “It’s not a natural skill for many retailers,” he said.
“I outsource my SEO, email blasts, and graphic design generation. It’s not complicated, but it’s time consuming,” said Wartels. In addition to local print ads, Skyview uses Constant Contact for email marketing, and both the Wine-Searcher search engine and Google Ad Words to drive traffic to the site. Wartels has outsourced much of the web management and email creation to freelancers. “It’s an expense but it’s worth it,” he said.
Khurana’s marketing strategy for Westchester Wine Warehouse focuses on segmenting customer lists by their stated interests: Bordeaux, whiskey, rosé, or rare wines, for example. “I spend a lot of time building email lists,” he said. “It used to be that you could blast one large email, but now I use segmentation to make sure people don’t delete or mark it as spam. People engage with these emails and share them. It drives sales.”
He also uses social media heavily, promoting in-house tastings to the segmented customer lists first by email, and then sharing photos and stories to their larger Instagram following the day of the tasting. Programs like Hootsuite can help retailers manage their social media feeds, and Khuraha noted he is increasingly using Eventbrite to promote events, which ultimately also help drive traffic to the online shop. Khurana has outsourced content marketing in the past, but said that bringing it in-house has always had the best return. “Creating unique tasting notes and specifics that highlight our store get us a far higher turn out and positive reaction.”
What’s Next in Wine E-Commerce?
Figuring out how to approach e-commerce can be challenging given the abundance of platforms, sales methods, and tools being offered to retailers, said the panelists, not to mention the ever-shifting shipping laws. From the vendor perspective, Griffith says that after 17 years of offering a traditional e-commerce platform to retailers, Bevsites’ strategy is shifting. “We expected a website to be it and people would show up, but more and more the website is the marketing platform. We have to help retailers be more nimble, to focus, target, and segment customers through added marketing tools,” he said, citing work on a new version of Bevsites designed to address these changing retailer needs.
Top of mind for all panelists was marketing. The stores doing well online are creating compelling content, engaging on social media, and establishing themselves as an online destination for consumers, Griffith observed: “If you can figure out how to communicate the voice of your store through someone’s writing, that will go a long way to your success.”