Sonoma State University - Wine eCommerce - Class #1 Presentation

1. 1BUS-800-102-14-SU
Wine eCommerce
BUS-800-102-14-SU:Wine eCommerce
Presented by:
Ron Scharman
May, 7. 2014
Session:1

2. 2BUS-800-102-14-SU
Wine eCommerce
1 Where Are We Headed
2 Who Am I and Why Am I Here?
3
The 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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Wine eCommerce
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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Wine eCommerce
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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Wine eCommerce
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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Wine eCommerce
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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Wine eCommerce
THINGS TO WATCH: MILLENNIALS
 The crowd is here
 Comfort level with mobile
transactions
 Ease of purchasing
 Millennials
 Growing FAST!

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Wine eCommerce
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
Marketing
Wine
Club
Events
eCommerce

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Wine eCommerce
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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Wine eCommerce
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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Wine eCommerce
Questions?
If you have a question please type it into the
Questions box on your screen.

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Wine eCommerce
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!