When Amazon.com started, I recall the debate about whether consumers would buy books online.
I just checked the growth in my own personal ordering with Amazon over the past
10 years (yes, I could do that in about one minute). In 1996, I placed three orders and so far this year, I have placed
47 orders (including one with Amazon
UK).
The wide selection, convenience of ordering, and reliable delivery system kept me and many others coming back, helping build Amazon’s current $16 billion market capitalization.
Despite the checkered history of Wine.com as an early pioneer in online wine sales, I believe there is pent-up demand by consumers to buy wine online for the same reasons which have driven Amazon’s growth: greater selection and convenience for consumers. The benefits to consumers are simply compelling. The real question is why haven’t online wine sales been more robust and clear market leaders emerged? The constraints seem to be:
- Restrictive interstate shipping laws that differ by state essentially create trade barriers for national retailers. Deep-pocketed wholesalers want all alcohol transactions to be face-to-face and have lobbied heavily to keep or tighten restrictions further. The creation of the Specialty Wine Retailers Association in early 2006 is dedicated to changing these laws for the benefit of consumers.
- Risk of minors purchasing online. New services for online age verification such as Idology’s will increasingly be adopted by wine retailers (including Vinfolio) and defuse this argument by wholesalers once and for all.
- Fragmented industry. The wine retailing industry consists primarily of family-run, privately owned business that tend to be risk averse and laggards in applying the latest technology to their business operations. The inability to sell easily across state lines in itself has stunted the development of larger players.
- Perishable nature of wine. It’s simply more complicated to deal with the logistical aspects of handling and transporting wine than books or electronics.
Bottom line: Online wine retailers are making progress and a future of “wine without borders” is achievable with a sustained effort. Wine collectors should support legislative changes in their home states to facilitate development of a true national wine market.
