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Wine Wisdom: Are Wine Clubs and E-Commerce taking over for Tasting Room Sales

Wine Wisdom: Are Wine Clubs and E-Commerce taking over for Tasting Room Sales

While tech executives flock to Esalen to discover their humanity and how to apply it to technology, Wine Direct (WD) views technology as the future for wine retailing.

WD calls itself “the Winery’s Champion”; as such, the company provides an array of services to establish and maintain a winery’s sales effort, including point of sale (POS), third party distribution connections and e-commerce, with fulfillment software that even provides weather reports for delivery dates.

WD offers what it calls its inaugural Direct-to-Consumer (DtC) Wine Sales Report, the result of a survey of 1,200 wineries representing over $1 billion in DtC sales across the U.S., Canada and Australia. The report digs into transactional data, mobile volume sales and an analysis of wine club, tasting room and overall online sales.



According to WD, the greatest sales opportunity for DtC is e-commerce. The report claims e-commerce produces an average DtC order of $282 and an average of 7 bottles per order, and since websites never have to close their doors, retail shelves are available 24/7. WD’s survey claims wine clubs and POS account for 70% of the wine retail trade—almost evenly split between them. But e-commerce represents only 10% of overall DtC sales, and that makes WD optimistic over its growth potential.

More specifically, WD says, “Between 2017 and 2018, mobile orders among WineDirect clients grew more than 30% from 144,000 orders to 190,000 orders.” The company expects that by the end of 2019, mobile orders will account for as much as 50% of online wine orders.

The report claims in the still growing Texas, Virginia and New York wine markets tasting room POS comes in at about 60% of DtC sales. But in longstanding established wine regions, POS registers just over one-third of DtC sales. WD says this is a reflection of customer loyalty, as visitors go home and buy online, often as wine club members. Wineries producing fewer than 10,000 cases annually slightly outperform online wineries producing up to 499,000 cases; “the largest players (500,000+ cases) have the best online sales of the group, likely due to their larger budgets and more substantial e-commerce and marketing teams.”



 

Wine under $30/bottle sells more at POS than wine over $100/bottle, which does better via telephone sales or to wine club members. Online, the report says, “…sales remain fairly consistent at all price points.”

Based on the report, the tasting room as a sales tool seems to have been losing its luster over the past few years; its average order value today is $110, and that includes the higher as well as the lower-priced products. According to WD, “The real value of providing in-person hospitality, therefore, is acquiring loyal customers who will join the club or purchase online in the future.” Website sales average $282 per order and wine club sales come in at $237.

Since 2015, tasting room POS fell (-2%), while wine club sales racked up 54% growth, yet globally, of the almost 700 wine clubs in WD’s analysis, fewer than 50 clubs have more than 5,000 members; nearly 60% have fewer than 1,000 members. California does better, but not by much; 50% of wine clubs have fewer than 1,000 members. All this points to WD’s insistence that, “…wine clubs have significant room to grow, even on their already robust base.”

In addition, according to the data, the average wine club membership length is 31 months.

In the final analysis, WD believes e-commerce is the future for wine retailing, with the wine club as a great vehicle for online sales—and wineries must make their websites mobile-friendly.

SOURCE: https://www.forbes.com/sites/thomaspellechia/2019/08/28/e-commerce-and-wine-clubs-will-overtake-tasting-room-sales-says-new-survey/?utm_source=Afternoon%2BBrief&utm_campaign=ffa6058fa4-EMAIL_CAMPAIGN_2019_08_29_09_30&utm_medium=email&utm_term=0_778166e558-ffa6058fa4-64685945#713a9e40d50f

About The Author

Joe Wehinger is the CEO of United Digital & Associates and the Publisher of this magazine Daily Ovation. He enjoys (and writes about) food, wine, spirits, travel, technology and philanthropy. Mostly, he likes to get people excited and curious about the things that get him excited and curious. Thanks for reading!

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