E-commerce Boom in Wine

A while ago I wrote about the diversification strategies of Amazon and how they are changing the face of e-commerce. Welp, they struck again.

Continuing their growth as one of the most dangerous players to ever hit e-commerce, just in time for the holidays they Amazon is making its third attempt in branching out into the wine business. Amazon Wine will feature 1,000+ wines ranging from $10 -$100+ (plus $9.99 shipping for up to 6 bottles). Thus far  featured wines come from various locations across this great U.S. Nation, and will be shipped to about a dozen states from California to Washington D.C. Amazon hopes to play the role of middle man/discovery center for wineries who provide their wine and are looking to raise their brand awareness and market sales through the online marketplace. Check out this Google+ Hangout on the topic:

Amazon is not the only retailer upping their game in e-commerce. Wine.com is already the nation's leading online wine retailer, but this week they announced the launch of Wine.com Marketplace, catering to domestic and imported wines with limited distribution channels in the U.S. Their soft launch earlier in the year sold thousands of bottles and encouraged the current venture. They might have an initial leg up on Amazon ifor the following reasons: experience navigating the 3 tier distribution and shipping laws, shipping to 20 states, free shipping with their $49 annual Steward-Ship membership, consolidating multiple wineries shipment to only require one adult signature, and the fact that they are the #1 visited wine website. 

This will absolutely be an interesting head to head competition to keep an eye on. 

E-commerce wine sales are not only taking off in the U.S. UK supermarket Morrisons has launched Morrisons Cellar, the online wine store aimed to boost the supermarket's wine sales by £100 million. The site will feature around 1,000 wines, doubling their in-store lot. Their goal is to help consumers choose wines they will like by using Taste Test technology. Taste Test technology builds personal wine suggestions through profiling which wines customers will like after answering a series of questions (ex: do you prefer black coffee or salty foods). Incorporating short videos helps consumers decide what category they fall into: sweet, fresh, smooth or intense. They've incorporated with social networks by allowing users to share their profile. They hope to use Taste Test in-store starting in 2013. 

So what does this mean for the wine industry?

Well, clearly the way wine is being sold is changing. Shipping & distribution laws will likely slow down the transition to e-commerce for many, as these pioneers sort it all out. Additionally, wine--- specifically nicer wine-- is a sensory experience that relies greatly on the knowledge of sommeliers. The influx of wine resources, reviews and profiles online and in apps, a new age of learning about wine is budding. Technological assessments like Taste Test, have the opportunity to democratize wine knowledge by giving access to information and personal profiles, which can be intimidating to some in-person and only available at specific locations. 

Along with democratizing wine knowledge, e-commerce sales could help democratize wine accessibility.  The rise in e-commerce sales of wines could enhance both the ease of trying varietals from various regions and wines from small wineries that used to not be accessible, which would be awesome for Millennial wine drinkers who are curious about experiencing many different brands and varietals they've never heard of, and do much of their wine research online. 

Amazon Diversification: Changing eCommerce or Stretching Too Thin?

Amazon has announced a plan to sell high-end fashion on its website. It could be really cool, or really problematic for amazon for a couple of reasons. First, high-end fashion purchases are specific- they are unique, they fit perfectly, or have some intangible that gives people the moral permission to spend the money. Thus, when brought into an eCommerce space there tend to be a lot of returns because people buy 4 items knowing they are going to return 3 and keep the best 1. Returns are expensive. And likely more than the $79 flat shipping fee offered by Amazon Prime if this happens a few times throughout the year. Secondly, there are already some really great outlets for high-end retail. Sacks, Neiman Marcus, Nordstrom and Bloomingdales all have well-funtioning websites, established discount campaigns, audience research and ways to pique interest when shopping might not be top of mind. Third, high-end fashion is already a crowded ball game. Online competition, discount sites and hubs have been around for years. Plus, how do you really compete with the feeling of spending an afternoon trying on clothes, feeling amazing materials and finding jeans that really fit your thighs? Amazon is going all out, though, hiring models, creating photography, and negotiating contracts.

On the up side, if this endeavor works it could change designer fashion sales forever. Some companies are already worried that their brick and mortar stores will become just a showroom for Amazon orders. Their fears are not unfounded. A recent ComScore report determined that leading mobile retail activities look like this: find a store, compare prices, look for a deal. This idea is called showrooming, and it is very real. Go to the store, find the pieces you like, and order them online for a better deal. 

This is not the only endeavor for Amazon. They have recently developed Amazon Supply to challenge tool suppliers like Grainger, ACME and Fastenal. However, their lack of experience in the category may not do them justice in a category that is firmly based in first hand knowledge and shared trade advice. 

Who knows how it will all turn out but one thing is for sure: these diversification efforts from Amazon may change eCommerce forever, or run them dry.