Dear Retailers,
Consumers shopping online over the past couple years have discovered a variety of websites offering wine at spectacular deals. Wine.woot.com comes to mind as probably the most popular site offering daily wine deals (while woot.com provides deals on a variety of electronics). It's hard for traditional wine retailers to provide such deep discounts since these online retailers can clear out inventory quickly and in huge volumes. This interesting New York Times article points out that as much as 25% of total online wine sales are generated through these deep discount wine websites. As the economy improves and wineries no longer have excess supply, these discounted wines and the variety that these flash websites offer should predictably decline. However, with $100 million in annual sales, it's a trend all retailers should pay close attention to if only to get some insight into the overall surplus (or lack there of one day) in the wine industry.
Cheers!
True Fabrications
www.truefabrications.com
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As a consumer, I have found Lot18 to be the most compelling, with WTSO and Wine.Woot coming in behind it. As part of their growth strategy, Lot18 is offering occasional coupons on deal sites like LivingSocial to drive traffic, resulting in hard-to-find wine at 50-60% off an already competitive price. Can they survive this way? Obviously not, but they can certainly increase traffic.
ReplyDeleteThe wineries are not losing out with the coupons...Lot18 takes the hit. Yes, the wineries have to be careful about devaluing their brand through association with sites such as these, but the fleeting state of a flash deal minimizes the impact.
As the economy picks up, I agree that these companies will be challenged to reinvent themselves. I see Cameron Hughes' business model working better in the long term....he buys excess inventory from the wineries and private labels the wine. The winery is able to offload excess juice and maintain the integrity of their brand by not being visibly associated with a discounter.
Lot18 is invitation only, but you can use the following link to access their offerings:
http://www.lot18.com/i/FriendsandFamily