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Wine eCommerce

BUS-800-102-14-SU:Wine eCommerce

Presented by:

Ron Scharman

May, 7. 2014

Session:1

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Wine eCommerce

1 Where Are We Headed

2 Who Am I and Why Am I Here?

3The Past, Present, and Future

of Wine Commerce

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Wine eCommerce

Wine eCommerce

vs

Wine Commerce

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Wine eCommerce

Got Wine?

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Wine eCommerce

QUESTION FOR THE SEMESTER:

How do we sell a 3-dimensional

story in a 2-dimensional world?

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Wine eCommerce

THE TRUTH IS, ITS HARD. VERY HARD.

It is hard to capture the essence of your brand online. This is everyone’s challenge.

Visitors are exposed to a number of stimuli that help frame their experience at your

winery. They breathe fresh warm air that blows across the valley floor as they enjoy

expansive views, marvel at architectural details, and soak in the overall ambiance of your

tasting room during their visit. All of these things help engage and interest them.

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Wine eCommerce

GROWTH STATS

The consumer direct channel of the wine

industry is the fastest growing and most

profitable channel.

Do you have all the tools necessary to be

successful and ride the wave?

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GROWTH STATS

• 2013 U.S. wine shipments grew 3% to 375.2 million cases with an estimated retail

value of $36.3BB. This represents 21 consecutive years of volume growth.

• The U.S. has been the largest wine consuming nation in the world since 2010.

• Direct to Consumer (DTC) shipments by US wineries grew at an impressive 7.5% in

2013, hitting a record $1.57 billion. Total volume was 3.47 million cases, up 9.3%

over the prior year.

• Direct-to-consumer shipments in March grew 20% over the same time last year and

were up 10% over the past 12 months. The total value of March shipments hit $213

million.

*Data from Wine Institute, Wines&Vines, & ShipCompliant

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Wine eCommerce

EFFECTS OF 2005 SUPREME COURT RULING

Supreme Court decision on May 16, 2005 changed forever

the wine landscape for the direct-to-consumer wine

market.

The Court’s majority opinion stated, "If a state chooses to allow direct

shipments of wine, it must do so on evenhanded terms."

The Court ruling: Regulate, But Do Not Discriminate

The States response: Regulate, Don’t Discriminate, But Do Complicate

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EFFECTS OF 2005 SUPREME COURT RULING

“There is tremendous

change rolling through

the industry right now

- it is a sea of change,

just beginning to be felt”

-John Hinman

Leading San Francisco Wine Industry Attorney

“With the complexity of rapidly changing

state regulations, it is essential that every

wine producer, regardless of size, ensures

they have an auditable, fully compliant

shipping process. The industry needs

service providers that can guarantee legal

access, with a certified audit trail,

for direct-to consumer fulfillment.“

-Steve Gross

State Relations Manager, Wine Institute

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OPPORTUNITY OF THE DIRECT TO CONSUMER MARKET

• Granholm Supreme Court decision forever changed the wine

landscape

– Opened and complicated wine distribution

– Set the stage for profit center focus on winery direct

– Created the environment for mid and large sized wineries

• Highlights the bottlenecks in current distribution and creates

a split between two channels

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OPPORTUNITY OF THE DIRECT TO CONSUMER MARKET

Domestic / Intl

Wine Producer

Wholesalers Retailers / On Premise

Consumers

Direct to consumer 10% of sales ($3.2BB)

Wholesaler distribution 90.0%

of sales ($36BB)

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Wine eCommerce

WINE INSTITUTE LATEST UPDATE

• 45 States out of 50 have

some provision for winery

direct shipping to

consumers.

• Importers and internet

retailers are restricted to

fewer states, depending on

method of shipment and

licenses held.

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Wine eCommerce

WHAT’S CHANGED? BIG COMPLEX SITES

2003 2014

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Wine eCommerce

THE WEB HAS BEEN GROWING FASTER THAN STORES….

27%25% 24%

20%

3% 2%

16% 15% 16% 17%

6% 5% 5%3%

0%

-3%

2%4% 4% 4%

-5%

0%

5%

10%

15%

20%

25%

30%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Annual growth rate 2004-2013* eCommerce versus retail spending

Growth in e-commerce Growth in non-e-commerce retail

*Source: U.S. Commerce Dept., Internet Retailer

Note: All other retail sales excludes auto dealers, gasoline stations and fuel dealers, and restaurants and bars.

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Wine eCommerce

MORE PC’S GATHER DUST

*Source: U.S. Commerce Dept., Internet Retailer

44%

11%

45%

Percentage of time on retail web sites

Smartphone

Tablet

PC

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Wine eCommerce

MOBILE COMMERCE SOARS

Source: *IBM; **Adobe

• Mobile devices accounted for 23% of online

retail sales over 4-day 2013 Thanksgiving

weekend*:

• Tablets 16%,

• Smartphones 7%.

• Mobile commerce sales grew 80% on Cyber

Monday over the same day last year.**

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THINGS TO WATCH: MILLENNIALS

The crowd is here

Comfort level with mobile

transactions

Ease of purchasing

Millennials

Growing FAST!

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OMNI-CHANNEL RETAIL

Today’s shoppers expect a single

shopping cart that follows them on

their customer journey

THAT MEANS through multiple

touchpoints – instore, online or on

the move – so that customers

have a seamless experience.

Omni-Channel

Retail

Direct to Consumer

Retailers

Direct Sales

MarketingWine Club

Events

eCommerce

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OMNI-CHANNEL RETAIL

DISCOVERY

• Search engine

• Word of mouth

• Advertisement

• Social Media

ENGAGEMENT

• Visits website

• Visits tasting room

• Social Media

• Mobile

ACQUISITION

• Purchases wine online

• Buys wine in tasting room

• Joins wine club

LOYALTY/LOVE

• Email communication

• Facebook shares

• Special events

• Ratings

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Wine eCommerce

WINERY COMMERCE ECOSYSTEM

Mobile Commerce

Wine Apps

SMS Text

Commerce Anywhere

Pop Up

Virtual Commerce

Social Commerce

Facebook/Pinterest/Twitter

Crowdsource

POS

Mobile POS

Kiosk

Tasting Room

Wine Club

Allocation/Mailing List

Email

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HOW IS WINE SOLD?

Winery Retailer – 8,000+ wineries in North America

Internet Retailer – Wine.com/Thousands of 17/20’s

Discount Internet Retailer – WineAccess.com

Marketplace – VintnersAlliance.com

Community Member Site – WineCommune.com

Flash Sale/Daily Deal Site – WinesTillSoldOut.com

Affiliate Marketing Site – Bottlenotes.com

Wine Auction Site – WineBid.com

Direct to Trade Site – WineTradeDirect.com

Growing Number

of Wine

Commerce

Business

Models

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Questions?If you have a question please type it into the

Questions box on your screen.

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USING YOUR WEBSITE TO TELL YOUR STORY

Strong branding is key

Include rich content

Use the tools built into your

website to improve your SEO

Gather data and market smart

Go Mobile!