The Wine Collector

A "flash sale" is a generic term applied to limited time (typically 24 to 48 hour) sales featuring a single item, or modest number of items from a single brand or small group of brands, typically at 50%-70% off suggested retail prices.  One of the most well known players in this category is Gilt Groupe, which focuses mainly on "premier fashion and luxury brands."  They have been so successful that numerous competitors have emerged and the selling methodology has spread to other product categories, including wine.  Recent entrants in the wine space include Cinderella Wine (from Gary Vee!), Wines 'Til Sold Out, and general merchandiser, Rue La La.

A new generic selling method

After assessing this new selling method, Vinfolio concluded that it's here to stay (with or without a recession). The combination of a limited time offer and a deep discount motivates consumers to buy before they miss the opportunity.  Flash sales also help fill a need for brand owners/representatives because not only are they a useful means of managing excess inventory levels, they can be an effective way to obtain new customers who buy again at full price after trying the wine (if executed properly).

Introducing Vinfolio's fine wine-focused flash sales

As Vinfolio's focus is on fine wine, we've decided to introduce a program (see today's press release) for high-end and boutique wineries, importers, and distributors which requires that the wine offered have a list price of $60 or more with a minimum professional score of 90.  We've also designed our flash sales to deliver long-term customer acquisition benefits and to leverage our full online marketing skillset (one of our key strengths).  So regardless of whether a wine's list price is $60 or $260, our program delivers value for the high-end or boutique winery, importer, or distributor.  If you are a member of the trade and would like to learn more, email flashsale@vinfolio.com.

Wine collectors should pay attention

For wine collectors willing to try new wines, the lower price points offered in flash sales reduce your risk of trial and stretch your wine budget farther.  However, don't expect to be able to buy large quantities at discount prices or see the same wine offered repeatedly.  For example, we permit flash sale partners to impose bottle limits of as little as one bottle for higher priced wine.  You should also expect the producer to be given your name and email address as a form of quid pro quo for being offered a great deal (this is the norm for all wine flash sale providers).  While you may opt out later, part of the reason these programs exist is to help wineries build their own direct-to-consumer channel.

Bottom line: Wine flash sales are here to stay.  If you interested in fine wines which appeal to more serious collectors and enthusiasts, then sign up on on our home page for Vinfolio's wine offers (which include flash sales).

The Wine Spectator published a story today titled "Is California preparing an Internet wine crackdown?" in which I'm quoted.  The issue is less over online wine sales than defining the requirements for who needs an alcohol license and who doesn't.

Service provider or unlicensed alcohol business?

The California ABC's "Industry Advisory", issued in June 2009, is titled "Unlicensed third party service providers" (italics added).  In the fast-changing world of online marketing, a new class of "marketing agents" has emerged to help drive sales, not just in wine but practically every other consumer-facing product category. But is the "agent" just an agent supporting a licensed business's objectives or is the "agent" really operating an (unlicensed) business supported by the licensee?

Where to draw the line?

The ABC advisory lists fundamental privileges of a licensee including:

1. Management decisions
2. Pricing decisions
3. Controlling the distribution of funds
4. "Sale" of alcoholic beverages
5. Profiting from the sale of alcoholic beverages
   

The last two points above require some clarification:

• Selling - The ABC defines "selling" to include any service provider who "solicit orders" or makes an "offer to purchase" to consumers.  Presumably this would include taking order details (wines, quantities), shipping addresses, and payment information.
• Profiting -The ABC claims that service providers charging a fee linked to a percentage of the sale usually equates to "profiting" from the sale.  I disagree (although Vinfolio terminated one service provider relationship anyway to avoid the ABC interpreting it differently as the story mentions).  There are basically three standard pricing models used for pricing marketing services in the online world: flat-rate advertising for listings/banners, pay-per-click, and payment linked to conversions/results (usually expressed as a percentage of the resulting sale value).  Does using a common, percentage-based pricing model (for any industry) equate to sharing in the customer's business profits?  "No."  The very term "profits" means revenue minus costs.  To participate in creating profits means having a say on all matters affecting revenues and costs which a true service provider would not be in a position to do. The third party we felt obligated to terminate because of some ambiguity in the advisory violated none of the fundamental privileges listed nor did they "sell" on our behalf.  They merely supported Vinfolio, a licensed business, in reaching its objectives. 
  

Bottom line: I suspect most marketing service providers to the wine industry are really that, third party service providers, regardless of their method of charging for services.  The most objective test some "marketing agents" may fail is whether they engage in the direct selling function.

Among new selling tactics that Vinfolio is rolling out in January, the first is a 1-cent ground shipping offer for wine purchases of $500 or more.  The intent is to remove the shipping "pain point" for most purchases (our average purchase is over $1,000) so that customers nationwide can make purchase decisions without regard to shipping costs.  There's no promotion code to enter; we automatically apply the discount on qualifying orders.  We'll be testing the effectiveness of this promotion in January and considering whether to make it a permanent benefit of buying wine from us.

Note that we already offer free delivery services in our temperature-controlled vans to customers within the San Francisco Bay Area (plus Napa/Sonoma) region.  We are (from today) cutting the minimum quantity to qualify for free delivery from 12 to 6 bottles (no value requirement; note our site is not updated yet for this change).  See the "Delivery Services" section of our Shipping and Delivery page for more details on weekly route schedules for different subregions.

Our local customers may use the 1-cent ground shipping offer in lieu of our free delivery service as typically Fedex delivers ground shipments within one day locally.  Using our van delivery, however, allows customers to schedule a time when an adult may be present to receive the wine and for the wine to be protected from temperature issues in warm weather periods of the year.

Finally, to meet our daily Fedex deadline, wine orders need to be placed by noon (PST).  Meeting this time also enables locals to pick up orders at "will call" at either of our warehouses the same day (from 3-5 pm for Napa and from 5-8 pm for San Francisco).

P.S. In case you're wondering why we're charging 1 cent instead of making shipping completely free, the CA ABC prohibits offering "free" goods to help sell alcohol.

If you're on email lists for fine wine retailers, you know that they're feeling pressure from the tough economy. Before considering wine retailing specifically, let's quickly look at the state of retailing in general.

The current general retail environment

Today's Wall Street Journal cover story is titled Retail Sales Plummet with a subtitle "Discounts Don't Revive Holiday Spending; High End Walloped."  After reading the article, I felt these headlines were a bit misleading.  Here's why:

• The 8% decline in December 1-24 sales over the prior year was really half that or 4% when gasoline price declines were excluded.
• Luxury goods (excluding jewelry) fell 21.2% instead of the 35% in the front page bar chart.  Unfortunately, that's still a high figure and fine wine probably fits more in this category than any other.
• Inflation-adjusted consumer spending in November showed consumer spending actually increased slightly in November (over 11/07) given falling gas price benefits.  Personal savings rates climbed too.
• "E-commerce showed the most resilience with online sales falling just 2%."  In another WSJ story, Amazon Lauds Its Holiday Sales, Amazon says it had its "best ever" holiday season.

The fine wine retailing environment

Robert Parker launched a comment on the Mark Squires Bulletin Board on eRobertParker.com in late November called Wine Market Correction which generated hundreds of responses and over 20,000 views.  While he paints a somewhat gloomy picture for various participants in the wine trade, there are always opportunities which emerge from adversity as people's willingness to try new approaches is higher than ever in the search for solutions.

With regard to fine wine retailing, I believe we will see some players fold who can not adjust fast enough to the new environment; others may seek third party investments (see The Wine Club takes on a new partner).

What fine retailers should do to succeed

1. Focus on execution fundamentals - Almost two years ago, I wrote a post called Criteria for selecting a good wine retailer which is aimed at wine collectors and enthusiasts but this can also serve as a checklist for what retailers should deliver.  Solid execution drives success as the Amazon story demonstrates.
2. Reassess business model assumptions - Assumptions that were once true may no longer be.  Evaluate how to operate more efficiently and with less business risk while treating nothing as sacred.  Cut costs wherever you can.
   
3. Pressure suppliers for better terms - Suppliers, whether distributors or producers, need your business too.  If you need more competitive prices, demand lower prices or the ability to market wine without buying it first where possible (i.e., brokering).
4. Access new customers - Get creative in how and where you target new customers.  Innovate with new marketing tactics.  Beef up your online presence.
5. Reactivate prior customers and increase "conversions" - Everyone has customers who haven't purchased in a while.  Have you revisited them to provide an incentive to come back?  If you conduct business online, are you doing everything to maximize the number of your online site visits which convert to sales?  E.g., we recently added a live chat facility to our site to provide expert wine assistance to online visitors during business hours with higher conversions as our objective.
   

What wine collectors and enthusiasts should do

1. Patronize wine retailers you care about - Support your favorite retailers by focusing your wine purchases with them, even when prices might be a little higher.  Consider why you like them and the services they provide that you don't get from others.
2. Refer friends to your preferred wine retailers -Word of mouth is a powerful mechanism.  If you're a wine collector or enthusiast, chances are you have plenty of wine drinking buddies.  Don't hesitate to share your "secrets" of where you buy wine (and why).  Read Seth Godin's piece Don't know what you've got till it's gone as he makes the point far better than I can.
3. Consider investing in fine wine - I've written many posts on wine investing recently but contrarian thinking is how people make money.  Moreover, your access to choice items at excellent prices is higher than ever.
4. Manage your pre-arrivals risk - In an environment which could drive some retailers out of business, you should consider the financial viability of your preferred retailers before making new pre-arrival purchases and track down overdue pre-arrivals not yet delivered.  (If you're a VinCellar user, this pre-arrival management capability is built-in).

Bottom line: Times are tough but fine wine retailers have plenty of levers they can pull to respond to much tougher market conditions and even gain market share in what is still an enormous, multi-billion dollar market for fine wine (even if prices are lower).  Wine collectors also have a role to play in helping retailers while also helping themselves.

It's been over six months since I wrote Interpreting Amazon's move into selling wine.  With Amazon in the news again today (see Reuters story) and a buzz in Napa Valley from meetings Amazon has been holding with wineries, it seemed time for an update on Amazon's plans and an assessment of who will emerge as winners and losers.

The "facts" (as best they can be determined)

• U.S.-produced wine only (at least initially)
• Goal of 5,000 unique wines at launch (which is scheduled for October according to Reuters); Note: I've heard Amazon's ambition is far higher (think "world's largest wine selection")
  
• Producers need to consign only a minimum of two cases of each item to New Vine Logistics (NVL), the Napa-based logistics partner Amazon is using to fulfill orders. 
  
• Each unique SKU requires the winery to pay initial regulatory fees of about $400 for label registration in 26 states (the initial coverage area; NVL can support more) plus lesser annual renewal fees.
  
• Each item must retail for a minimum of $12 and the winery maintains control of the retail price.
• The winery receives 47% of the retail price when sold.
• Buyers seeking "sold out" items can request to be auto-notified when back in stock.
• Buyers who subscribe to the Amazon Prime (free two-day shipping for an annual fee of $79) will be able to use it (for a minimum of a 2-bottle purchase).
  
• As with any Amazon-sold item, consumers can post positive (or negative) reviews online.

Why some wineries will agree

• If you make more wine than you can sell, retaining 47% is not much different than selling to distributors (and far better than wine going unsold).  Moreover, Amazon provides a turnkey approach to getting one-stop distribution to larger market states.  This might particularly appeal to new brands or those with limited resources to invest in staff and support systems.
  
• Retail price control stays with the winery.
• Only minimal stock (2 cases) need be provided per item.
  

Why some wineries will NOT agree

• If you can sell your wine directly or through other established channels (such as directly to retailers) and keep 100% (or something much higher than 47%) of the retail price, you're probably way ahead even after absorbing other costs.  This tends to be the case with higher-priced wines which are often allocated.
• With 5,000+ SKUs, buyers still need to find the wine to buy it.  Selling through Amazon does not eliminate a brand's marketing investment requirements.
• For a winery with a large number of SKUs, the initial regulatory filing fees per SKU may put some off.
  
• Some will argue that Amazon's 100% online approach (where there's no human to consult for advice and recommendations) is too impersonal and doesn't deliver the brand experience desired by the winery.

 Winners

• Amazon -  The above model combined with Amazon's online marketing skillset, customer base of 100 million accounts, market clout, and sheer execution capabilities, is bound to be successful, at least with lower-priced, higher production wines.
• Certain wineries where the business model offered fits their needs.
  
• Consumers who appreciate the one-stop, transactional convenience of Amazon, especially those who've already paid to be Amazon Prime subscribers, as free delivery levels the playing field with local shops.
• Domestic wine industry - More direct-to-consumer selling ultimately helps generate broader acceptance of this method of distribution which will, in turn, increase consumer access (and wine sales for the industry) and bring more pressure to modernize antiquated direct shipping law.
• New Vine Logistics who just got a huge new customer, not to mention a serious endorsement that should help it attract more direct winery business.

 Losers

• Wine retailers that sell "mainstream" wine (whether offline or online) as they'll now have a significant new competitor.
• Winery logistics competitors of NVL.
• Distributors, as Amazon's move helps erode their state-specific market controls (even though NVL will go through the three-tier system in at least some states).

 Neutral/Unaffected

• Fine wine retailers who deal in collectible, allocated, imported, and higher-priced point wines.
• Certain wineries producing higher-priced wine at modest-to-low production levels who can sell all they can produce already at higher margins than Amazon is offering. Moreover, many of these wineries also prefer to control the customer interaction with their brand more closely and will shun distribution outlets that might "commoditize" their brand.
• Winery ecommerce systems providers might lose some winery prospects who decide to just "outsource" their ecommerce to Amazon.  However, basic economics still favor wineries developing at least some direct-to-consumer capability.

Your opinion

How do you think Amazon's move will play out?

P.S.  Other blog posts of note on this topic include the Winery Web Site Report's Details on Amazon's Upcoming Wine Program and Jeff Stai on Amazon.com's Wine Program, and Classicwine.com's Will Amazon Do for Wine What it has Done For Books?

What is your reaction when you walk into a wine store that is noticeably warm, even hot?  Mine is to turn around and walk out.  Here's my rationale:

1. If the merchant cannot be bothered to take care of wine in its possession, it probably also didn't pay attention to how the wine was handled in the distribution channels prior to delivery.
2. Merchants will argue that in-store bottles turn over rapidly so the higher store temperatures will not have much impact on the quality of the wine.  But how does the buyer know how long the wine has been sitting (or standing!) there?  Fine wines also don't tend to fly off the shelves.
3. The negative impact of high store temperatures is a function of how warm the store is (see story below).
4. Even when a store in a warm weather climate is cooled, what happens to store temperatures after closing when the A/C is turned off?

My recent experience in Italy

I just returned yesterday from a vacation in Florence (which in July is hot -- highs of 35+ degrees C or 95+ degrees F).  Yet, not a single wine store I entered was air-conditioned despite carrying some very expensive wines.  Needless to say, I didn't buy anything.

The one notable exception that I found was in Lucca, Italy (an hour away) where a wonderful shop called Enoteca Vanni had an extensive selection of older Italian vintages mostly housed underground in a network of low-ceilinged, passive cellars.

Bottom line: The condition in which wine is stored is merely one of many criteria which should be considered in where you buy wine (see Criteria for selecting a good wine retailer).

P.S.    See also Wine storage temperature's impact on aging.

P.P.S.    This story was inspired by a recent article on Decanter.com titled "Top stores keep wine too warm" which reviews the situation in the UK.

As any wine collector knows, it's difficult to find all of the fine wine you want to buy from a single wine retailer.  As noted before in Buying smartly from wine retailers, you increase your odds of obtaining scarce fine wines by concentrating your purchases because most retailers make some attempt to reward loyal customers with priority access.

Our approach to cultivating loyalty 

In early 2007, Vinfolio created a customer priority program.  Benefits increase with reaching higher annual spending levels ($5,000, $25,000, and $75,000+).  The prime benefit is priority buying access to scarce, allocated, and/or highly rated wines.  These wines are generally highly sought after but given excess demand, I'd always prefer to offer them first to customers who have demonstrated their loyalty to Vinfolio.  So that's what we do -- in a very systematic fashion.

How it works 

For newly puchased wines that fit our criteria for scarcity and high ratings, we literally offer these wines in three successive 24-hour periods to an expanding group of priority customers before releasing any remaining unsold wine to the general public on our website.  Wines that sell out at a given level are simply not presented to the next level.  When signed in on our website, priority customers are recognized and wine available at their benefit level is made available to purchase.

Moreover, the email notification such customers receive that announces newly available wines is personalized to reflect whether the customer already owns a wine being offered and in what quantity (based on the contents of their VinCellar cellar management software account).

Bottom line: If your retailer is not reciprocating your loyalty in some proportionate manner to your spending level, then take your business elsewhere.

Note: This post was inspired by a book excerpt titled "Loyalty is a Two-Way Street" from a new book called Marketing Metaphoria that was written up in a recent article in the Harvard Business School's Working Knowledge email newsletter.

Buying wine involves a certain degree of trust by the customer in his/her wine retailer. 

A quick definition of "trust"

As succinctly described in The nature of trust from the Slow Leadership blog, "trust" boils down to four key elements:

1. Meeting obligations to protect others' interests (not just your own)
   
2. Acting with honesty and integrity
3. Openness
4. Keeping promises
   

Applying the elements of trust to wine retailers

Here are 10 ways wine retailers can develop that trust and the resulting higher sales derived from it: 

Wine ratings can be a contentious subject and I've already done my own rant on them last year (see How to use wine ratings successfully).  But I wanted to expand further on the last part of that post addressing how retailers use professional ratings.  Here are a few approaches a retailer could use:

1. Show highest ratings selectively - The selective representation of ratings is the norm for retailers.  The goal here is to promote the highest possible ratings but only when above a threshold to encourage buying.  The quality of the source is less important than the number. The actual commentary on the wine may or may not be provided.  A corollary to this approach is that wines with ratings below the threshold are displayed without their low ratings (the theory being that bad ratings are worse than none).
2. Display professional comments without the ratings - The philosophy here is that the descriptions help sell the wine but the ratings might turn people off so hide them from the buyer.
3. Show all ratings, good and bad - This method provides transparency (at least for an identified set of sources). It recognizes that many wine collectors will independently check ratings using their own paid subscriptions to reviewers' sites if none are provided or a rating is missing.  Moreover, as ratings are only one input into a purchase decision, I could easily argue that a poor rating on a wine from a favorite producer creates buying opportunities as price likely reflects less buyer demand.

Deception?

Let's face it.  Methods 1 and 2 are less than totally honest ways of dealing with customers.

Transparency builds trust 

As far as I know, Vinfolio is the only wine retailer who voluntarily offers up all ratings, good or bad, for a reasonably complete set of professional sources.  This transparency enables our customers to make informed purchase decisions without spending extra time looking up reviews and breeds trust in our brand. 

To be fair, taking this approach is easier for us than most retailers because we pay to license all review content from major reviewers such as Stephen Tanzer, Allen Meadows, Roy Hersh, and Richard Juhlin (see today's press release on the addition of Juhlin and our content partners page).  This content is deployed both in our free VinCellar online cellar management software and within our online store.  So whenever we are selling a wine reviewed by one of these parties, the most recent rating from each source is automatically displayed (without censorship!).  See example below:

In addition to our current licensed content partners, Vinfolio also manually adds Robert Parker and Wine Spectator scores wherever possible (and yes, we would be glad to license their content too if we could persuade them to do so).  But the lack of an automated way of mapping their reviews to the wines we are selling means we will always have "holes" for these valuable sources. Finally, Vinfolio also tries to provide its own ratings and reviews whenever there are none from professional sources (or to supplement them).

Bottom line: Which approach to retailers' use of ratings would you prefer as a buyer of wine?  What would you do if you were a retailer and why?

The Neiman Marcus brand has earned its well-deserved reputation as a luxury goods retailer providing excellent service.  I would guess that many fine wine collectors are also Neiman Marcus customers just based on their common demographic profile.  So when I read the article today from Wines & Vines describing a Silicon Valley Bank-sponsored marketing seminar for wineries by former CEO Richard Marcus, I was particularly interested in the wisdom being shared.

Here are a few nuggets which resonated with me in the context of fine wine retailing:

• Building a luxury brand - "Offering a top-quality product along with exceptional customer service are essential elements to building a luxury brand."  This is exactly what Vinfolio is striving to do and why our guiding principle is "Fine wine, finer service."
  
• Paying attention to customers - "Each and every one of those customers has value.  Nobody can predict what any given customer is capable of spending.  This means knowing each client."
• Personalize communications with customers - "The question is, are you talking to all of those customers the same way, or are you shaping your communications depending on how that customer has behaved with you?" We use wine specialist staff, analytical tools, an enterprise-class marketing software platform and knowledge of what wines are in a customer's VinCellar account to achieve our goal of personalized (i.e., relevant) communications with customers.

Your opinion: What else do you believe constitutes excellence in fine wine retailing?  Please add your comments to this post.

The Financial Times published a story, Amazon to enter US wine market, that infers a new strategic move by Amazon into US wine sales based on a recruiting specification for a senior wine buyer to be responsible for a "massive new product selection."  What's it all mean?

The Opportunity for Amazon

• The $25+ billion U.S. wine market is simply too big for the world's largest retailer to ignore.
• Wine has truly gone mainstream or Amazon wouldn't deal with the potentially negative PR of selling alcohol (see Top ten reasons driving wine's growing popularity).
• Selling wine complements Amazon's move into groceries, which includes national sales of more than 22,000 non-perishable items and a pilot program in Seattle called AmazonFresh that includes perishable items delivered locally.
• Amazon competitors in groceries such as Costco and Safeway sell wine online (see Safeway expanding into online wine sales) so Amazon needs to respond.

Amazon's intentions

While the FT article indicated Amazon declined to comment on its plans, the reference to a "massive" selection implies national online sales as one wouldn't bother to build up a large wine inventory as a mere adjunct to the pilot program of AmazonFresh.

Challenges for Amazon

• Licenses - Selling wine requires Amazon to become licensed in one (or more) states depending on whether they fulfill orders from a single location or from multiple states.
  
• Shipping laws - Interstate shipping of wine involves a maze of confusing regulations that may be a new form of challenge for Amazon's highly regarded fulfillment operation.  Hopefully, Amazon will throw their weight and financial resources behind the SWRA's initiatives to streamline these laws.
• Supply requirements - Amazon's mass market retailing approach implies a focus on wines at lower price points that tend to be available in larger quantities.
• Age verification of buyers - This would be a new requirement to implement in an online context that isn't currently part of Amazon's ecommerce capabilities.
• Perishable nature of wine - If Amazon plans to ship nationally, it will need to contend with weather conditions during shipment that potentially damage the product.

Inherent advantages supporting Amazon's move

• Purchasing clout - Amazon can buy in volume and negotiate better pricing than other retailers (although this doesn't really apply to more sought-after, limited production wines that don't need to offer financial incentives to sell their full production).
• Low shipping costs - If one can use Amazon Prime (free two-day shipping for an annual fee of $79) for a 40 lb case of wine, then this delivers real savings to the consumer.
• Online marketing skillset - Amazon has a reputation for pioneering online marketing features which become industry standards.

Conclusions

• Amazon is well positioned to make inroads into online wine retailing but will need to conquer the same challenges currently frustrating others to succeed.
• The competitive landscape for online retailers selling mainstream, high-volume wine brands is likely to become much tougher.

I'm on a family ski vacation in Utah, which is one of the most restrictive of the 18 alcoholic beverage "control states." A "control state" is where the state maintains a monopoly over the retailing and/or wholesaling of some or all categories of alcoholic beverages.  See Wikipedia definition for a good history of how this practice came about.

Goal of curtailing demand not met

When I arrived in Utah on Saturday afternoon, I stopped by the Utah State Liquor store in Park City to buy some wine for the week for our group. The first thing I noticed was that there were 15 people in line at each of 3 cash registers.  While this was inconvenient because it meant wasting my time, I suppose it was consistent with the Utah state philosophy (by helping discourage buying) as listed on the Department of Alcoholic Beverage Control (DABC) website:

"Utah's liquor laws are based on the general philosophy of making alcoholic beverages available in a manner that reasonably satisfies the public demand.  In this respect, however, the state does not promote or encourage the sale or use of alcohol." (emphasis added)

Maybe Park City is an exception because of the tourist traffic but it seems like demand has not been moderated by state policies.

No benefit of state stores vs. privately licensed agencies

Utah operates 36 stores and 100 "package agencies" (click here for details).  The latter group is simply an extension of the state operation with all products still being purchased from the state acting as the wholesaler.

The only possible argument I can think of for perpetuating Utah's (and other control states') anti-free market regulatory structure is that it somehow makes enforcement of liquor laws more effective.  But how?

If all the stores were state-operated, then perhaps they could claim that employees of the state were better trained than those in the private sector to enforce age checks rigorously when selling liquor.  But Utah has 100 private parties who are licensed to sell alcohol so they presumably have already had to create an enforcement mechanism to monitor sales through these outlets (as have the 32 non-control states).  So what real purpose is served by operating stores (and being the sole wholesaler)?

Wine selection is limited

Utah publishes its price list online (all 151 pages in February 3rd list, not searchable).  While the length of the list may seem impressive, this is for all alcohol, not just wine.  More importantly, just because a product is listed does not mean it is available.  If one looks at red Bordeaux (see pg 112), for example, there are a grand total of 150 items listed (including some first growths).  But when I inspected the selection at the Park City store, there were less than 20 items to choose between (and they were not the better ones in the list of 150)!  In contrast, Vinfolio's current selection of red Bordeaux numbers 293 items available to order.  Maybe limiting selection is the real strategy for trying to reduce demand.

Lack of out-of-state purchase option

According to the Utah DABC website, "private individuals may not lawfully import or transport [liquor products] into the state."  Also, "you may not bring alcoholic beverages into Utah for any purpose whether it be for personal consumption, to serve at your hospitality house or at a private social function, or to give it or sell to others."  Forget about Fedex'ing it either, as friends who have tried to do that have generally not succeeded and they've incurred double shipping costs when the wine is returned.

Bottom line: The "control state" approach for regulating alcoholic beverages does not serve consumers' interests nor does it in itself help achieve the typical control states' objectives.  If the control state's goal is not promoting or encouraging consumption, this could easily be achieved via a licensed-based regulatory model together with a law prohibiting advertising or promotion of alcohoilic beverages.   A licensed-based model without expanded sourcing channels would dramatically improve the range of wine selections available to consumers.  Out-of-state retail purchases could also be enabled with an appropriate shipping permit system requiring sales taxes to be collected and sales reports to be filed.

Alder Yarrow of the #1 wine blog, Vinography, seems to have kicked off a firestorm with his post of today entitled Wine.com Gives Retailers (and Consumers) the Finger.  This was then picked up on the equally popular Mark Squires Bulletin Board on eRobertParker.com in a post titled Shipping-Related Outrage: Wine.com Goes Ballistic.  At the time of this post, there are over 100 comments between the two threads.  What's going on?

Direct shipping laws are the real problem -- Again!

Once again the central issue revolves around this country's perverted direct shipping laws for wine.  The outrage being expressed stems from the tactics Wine.com employed in its attempt to create "a level playing field for all wine sellers" (in itself, a laudable goal).  However, those tactics were not aimed at changing the laws directly, but instead at encouraging regulators to more rigorously enforce those perverted laws.  In a comment posted to the Vinography thread, Wine.com's CEO states "if we can use our legal standing in a state to get their attention to the issue, maybe we can bring about changes [re: shipping laws] that will benefit the online wine business."  Maybe.  But based on the wine-consuming public's comments on the posts noted above, they seem to disagree vociferously.

What will it take to change wine shipping laws?

The wine retailing community finally started getting organized in late 2005 when it became clearer that the Granholm Supreme Court decision was not going to translate into equal treatment for all wine sellers.  This is when the Specialty Wine Retailers Association (SWRA) was born.

Retailers' self interest ensures they are making an effort with serious time and money to pursue litigation to remedy the current discriminatory situation in most states.

As Tom Wark, Executive Director of the SWRA, points out in his comment (#75) in the Squires thread, the other largely-missing-but-necessary ingredient for success in this effort is consumer involvement.

What sort of consumer involvement is needed?

• Speak up to your state legislators.  If enough people become active, they will listen as you keep them in office.
• Donate directly to the SWRA.  Litigation is expensive and it must be pursued on a state-by-state basis.  Each state's effort typically costs a minimum of six figures and can easily reach $500,000 or more in a protracted legal battle versus better funded wholesalers.  If only 100,000 wine consumers donated $25 each (the cost of one modestly priced bottle of wine), it would make a huge difference to SWRA's resources.  Donate now.
  
• Use your buying power to influence retailers to join the SWRA.  If you buy from out-of-state retailers, find out if they are SWRA members.  If not, buy elsewhere or encourage them to join.
• Stay informed on the issues.  Sign up for the free SWRA newsletter via email.  The SWRA is the only trade association seeking to protect your rights to buy wine from out-of-state retailers.  Keep in mind that the laws have evolved to treat wineries separately from retailers (in my opinion, because wineries were politically organized at a time when retailers were not so retailers were "thrown under the bus").

Bottom line: The wine retailing community needs to act together to right the wrong of the current state of wine shipping laws.  The SWRA is the vehicle to organize the fight and can provide the leadership and a meaningful component of the necessary resources to win.  But, you, the consumer, have a vital role to play.  Make yourself heard!

Wine-related online traffic in the 2007 holiday season is up 35% from 2006 versus 15% for overall e-retail traffic according to a news story this week in Wine Business Online, Online Wine Sales Flourish During Holidays. 

Additional evidence supporting growth in online wine sales

Vinfolio (which only sells wine online) experienced an even steeper increase of 45% from the prior month.  The chart below shows average weekly new user sign-ups for the last two 4-week periods.  While we are growing rapidly, that increase is much larger month-to-month growth rate than normal.

 

Easier interstate shipping by retailers is NOT a driver in online wine sales growth

As noted in a prior post, 92% of wine consumed by "core drinkers", only 20% of weekly (or more often) wine drinkers bought wine online in 2006.  The reasons to buy online are compelling (e.g., greater selection, better prices, and convenience) and I believe these factors are probably what's  driving 2007's increase.  But a relaxation of interstate shipping rules for retailers is certainly not a reason. 

If anything, while the 2005 Supreme Court decision Granholm vs. Heald caused improved shipping laws for wineries, they've gotten worse for retailers.  For example, Illinois voted to ban out-of-state retailer shipments after 15 years of permitting them while simultaneously permitting wineries to continue shipping.  In addition, Texas is fighting (unsuccessfully so far) to ban out-of-state retailer shipments too.

As the Executive Director of the Specialty Wine Retailers Association, Tom Wark, points out in a Wine without Borders blog post titled Michigan Judge: "Retailers covered by Supreme Court Decision":

"Since that groundbreaking Supreme Court ruling, distributors across the country, as well as some State officials, have been arguing that because the case specifically concerned wineries, the principles of non-discrimination explained in the ruling did not apply to wine merchants, just wineries.

This is like saying that because Brown v. Board of Education was a case argued on behalf of an African American girl, it is still constitutional to pass laws that discriminate against Hispanics. That’s ludicrous. So is the view that wine retailers can be discriminated against when it comes to wine shipment laws."

Bottom line: The true potential of online wine sales has not been realized and won't be until the interstate shipping laws are changed to create a level competitive playing field for retailers.  When the laws are changed, and they will be, you'll really see online wine sales boom.

A little noticed news item in The Napa Valley Register on September 30, 2007 would seem to signal an expansion of online wine sales by the major grocery chain, Safeway.  From a quick check of Safeway's shopping site, one can already order wine online (2,147 items listed on Winesearcher.com) but only for local delivery.

What happened?

1. The American Canyon, CA planning commission approved a conditional use permit for Safeway to open an office that will be licensed to take online wine orders.  When the office will open is not determined yet.
   
2. Orders will be shipped Fedex with warehousing/shipping support by New Vine Logistics, a major wine industry fulfillment house used by many wineries for (almost) national shipping of wine -- 36 states can be shipped to via NVL according to the services description on their site.
3. Given the maze of shipping laws that wine retailers must contend with, it's not surprising that Safeway is starting off cautiously by taking online orders only from California residents.

Why it happened

1. Safeway no doubt has noticed the success that Costco has had in the wine category, including Costco's online wine sales initiatives which are currently limited to 5 states (CA, IL, NM, OR, and TX).
2. Wine is a huge retail category with $25+ billion in retail sales annually.  That's too big a pie to ignore.
3. Consumers are increasing their online spending in all categories and offering wine online enables consumer needs to be better met.

Why it's significant

1. The fact that the director of Safeway's national direct business was involved in securing the approval and her comment that there "potentially" could be other offices signals broader ambitions.
2. New Vine Logistics' ability to support out-of-state shipping from a single location also implies sales beyond CA might occur in the future.
3. Major national retailers like Safeway and Costco seeking growth in online wine sales is a very positive development for consumer direct shipping initiatives such as those of the Specialty Wine Retailers Association as it should inevitably bring additional support to bear.

Buying wine on pre-arrival often gets a bad rap as in a June 5, 2007 article appearing on Wine Spectator Online titled "Pre-arrival wine purchases are only for patient people."

Definition of Pre-arrival

"Pre-arrival" is a term used to describe wine offered for sale prior to its arrival at your retailer.  Why would your retailer do this?  Because faster sellthrough of inventory creates a better return on capital which in turn keeps consumer prices lower.

Pre-arrivals can be created when a retailer buys wine from any source if the retailer chooses to begin selling before the wine has arrived.  Sourcing from a local distributor or directly from a producer (e.g., a Napa winery) simply means a shorter wait (a few days to a few weeks) than if the retailer sourced the wine directly in Europe (which could take 3-6 months or longer).

Reasons to buy pre-arrivals

1. Snooze, you lose - It's common industry practice for highly sought-after wines to be sold as pre-arrivals.  If you wait, you may not be able to buy the wine later at similar price levels (or at all).
2. Lower prices - There are various reasons contributing to lower prices such as (a) better retailer capital utilization and (b) the fact that there are often fewer parties (and mark-ups) involved in the supply chain.
3. If you're cellaring the wine anyway - For most collectors, much of what they buy on pre-arrival is not for immediate consumption and will be cellared.  Therefore, whether the wine arrives in one week or six months is generally less important than securing the wine at a good price.
   

Areas of confusion

1. Futures vs. Pre-arrivals - The term "futures" is analogous to "pre-arrival" but is normally associated only with new releases.  See a prior post (Wine futures and pre-arrivals: what's the difference?) for a full explanation.
2. Type of wine - Pre-arrivals may apply equally to newly released wine or a 20-year old vintage.  For example, Vinfolio routinely sources both newly released and older vintage wine in Europe and sells all of them on a pre-arrival basis.
3. Free retailer use of your money - Most people I speak to about pre-arrivals bring this point up.  There is no such retailer benefit (at least for a reputable retailer).  Speaking for Vinfolio, our standard is to pay all international sources within 15 days of making our purchase commitment (and sometimes we do so immediately to secure a parcel others are competing to buy).  Payment is clearly required before foreign sources will release wine to our logistics partners.  The sooner it is released the sooner our customers get it.  Receiving their wine, in turn, tends to generate further orders.

Questions to ask your retailer

1. When is the pre-arrival expected?  How often are the retailer's estimates wrong?  Vinfolio provides timing estimates for every pre-arrival wine in our online wine store.  There are some factors the retailer cannot completely control which is why they're only estimates.  If you absolutely need wine by a fixed date, either avoid a pre-arrival purchase or ask your retailer when the wine is arriving before your buy (and give yourself some extra room for delays).
2. Does the retailer have a written invoice confirming its own purchase from the supplier?  There are retailers who broker wine they don't own (and don't have on reserve with a supplier) on the theory they can backfill the supply based on orders received.  When they can't, your order tends to get cancelled.
3. Are you notified proactively by the retailer upon the wine's arrival or is the responsibility yours to remember to chase them?  Vinfolio emails customers automatically when wine is received in our warehouse.  Customers may also check order status online or call/email our Customer Service department any time.  For many other retailers, the onus is on the consumer to manage their records and remember to chase the retailer until their wine is delivered.  Note: Vinfolio's free online VinCellar software is designed to handle tracking pre-arrivals from any retailer as part of its capabilities.
4. What's the retailer's history of failing to deliver and what are you offered as compensation in such a circumstance?  If the market value of a wine has appreciated since you ordered it, getting your money back is an inadequate remedy for the retailer's failure to deliver.  While we have not had to invoke it, Vinfolio has a published policy described in our terms (listed on our site) which includes a 125% refund.  

Conclusions

Pre-arrivals generally serve the collector well but understanding how they work helps set appropriate expectations.  As the Wine Spectator Online reporter discovered, where you buy your pre-arrival also makes a big difference to your experience.  For advice in that realm read my prior post, "Criteria for selecting a good wine retailer".

We're delighted to be named in the "10 best online wine shops" by Food & Wine magazine in their June 2007 issue.  Read the excerpt about Vinfolio or the full article.   Vinfolio is also singled out for its strong wine guarantee in the first tip in a sidebar called "Tips: Things to know before you buy."

Updates to the article's content

• Our revenues have always been dominated by wine retailing (95+%), not storage.  This is merely a reflection of where wine collectors spend their cash (i.e., on consumption).  We do offer full-service storage services, in part to support our retail activities.  E.g., we provide 6 months of free storage on purchases to enable shipment during moderate weather conditions.
• Our "recently launched" web store was released in September 2006 and was our second generation online store (admittedly, a huge improvement over the first one).
• Every customer is assigned a wine specialist to provide wine recommendations and advice by phone or email (there's no minimum spend requirement). The article is actually referring to our Collection Building advisory service which is a more involved "consulting" exercise performed at no charge provided a minimum of $10,000 is spent on initial wine purchases.

If you're not already a customer, please give us a try and learn what we mean my our guiding principle, "Fine wine, finer service."

Retailers should take a page from the playbook of the wine wholesalers in terms of how to succeed in the wine direct shipping wars.

Consider the following remarks extracted from a speech made on May 1, 2007 by Craig Wolf, the President and CEO of the Wine and Spirits Wholesalers of America at their 64th (!) annual convention:

• "We are unstoppable when we are united."
• "One of the easiest ways you [wholesaler members of the WSWA] can become more involved is to contribute to the PAC [political action committee].  WSWA's PAC is and needs to remain one of the industry's largest.  It is an essential tool to advancing our Government Affairs agenda."
  

Why retailers need to unite and join the Speciality Wine Retailers Association

1. Unfortunately, the best interests of consumers and Constitutional principles do not always prevail without a defense.   Until the creation of the SWRA in 2005, there was no defense against wholesalers buying political access to accomplish their "agenda".
2. The wine retail industry is inherently more fragmented than the wine wholesaling business which makes the task of acting together more difficult.
3. Financing the battle against "one of the industry's largest" PACs, which mostly means paying legal bills and lobbyists, is extemely expensive and requires the broad participation of wine retailers to share the financial burden against well-financed wholesalers. 

Your role as a consumer

As Tom Wark, the SWRA's Executive Director, points out in a Fermentation post yesterday called "A 'force of voices'", "consumers and wine retailers are natural allies in this strange battle."

The best things you can do to support a national market for wine are:

1. Encourage your favorite retailers to join the SWRA and patronize retailers who are SWRA members to help them finance the campaign.
2. Stay informed about wine direct shipping developments in your state and be prepared to contact your state representatives on short notice to make your opinions known on pending legislation.  This is why the SWRA created their Consumer Outreach E-mail List.  Click on the link now and sign up.  There is nothing more powerful than a constituent registering his or her  opinion.

Click here to review my prior posts on shipping-related matters.

Disclosure: Vinfolio was one of the SWRA's founding members and I continue to serve on the Board of Directors.

The wine retailer Premier Cru in Emeryville, CA, doesn't think so.

Premier Cru stopped accepting returns of open bottles two years ago according to Daniel Sogg in his story titled "The right to return?" in the May 15, 2007 issue of the Wine Spectator.  The rationale offered by co-owner John Fox in the article is "It's the lack of knowledge by the consumer...most people who say a wine is corked are confusing it with something else, like [the leathery, earthy character of brettanomyces], or they just don't like it."

While some consumers may get it wrong, it's not likely 100% of them do which is what Premier Cru's policy assumes.  On the other hand, perceived "unfair" treatment is one issue which riles consumers and drives them elsewhere.  So even if the consumer is wrong occasionally, the value of retaining the customer outweighs any cost of a return.

For more behind the Vinfolio philosophy, see my prior post, Returning faulty wine to retailers. In addition, read our current wine guarantee and returns policy.

A recent thread titled "Wine-Searcher used for teasers?" appearing on the Mark Squires' Wine Bulletin Board on the eRobertParker site struck a chord with me.

Most wine collectors use one or more of various wine price comparison engines to search for a wine they're interested in buying.  Winesearcher.com is the most popular of them.  A common problem encountered by users is that the wine being advertised is often "just sold yesterday" or otherwise not available when the collector seeks to buy it.  Are retailers engaging in "bait and switch" tactics?

Retailer input is a big part of the problem

1. Data collection by "scraping" - Most data appearing in Winesearcher is collected by "scraping" it from the retailer's web site, meaning a software program "crawls" the retailer site's unique layout and attempts to strip out the relevant information to populate a listing.  This is inherently problematic as every retailer site is different and site layouts get modified periodically.
2. Infrequent update frequency - Winesearcher on average updates a given retailer site "at least once a week."  Ideally it would be daily and it can be if the retailer makes a data feed available to Winesearcher to avoid the site scraping process (which is what Vinfolio does).
3. "Technology-challenged" retailers - Most retailers are small businesses (often rooted in a "bricks-and-mortar" operation) that are slow adopters of new technology that's needed to facilitate online sales.  Tasks like maintaining an accurate real-time inventory are not easy for them (as hard to believe as that may be for an inventory-driven business).
4. Listing of "sold out" wines - Many retailer sites complicate the accurate scraping of data by listing prices for sold out wine.  One search engine competitor of Winesearcher told me he believes that over half of the retailers' sites they scrape do this.
5. Brokered wine - Brokered wine is by definition wine that the retailer is marketing but does not own.  This is very problematic for the collector because there may be many retailers offering the same physical stock of wine from a single wholesaler.  A purchase request must first be confirmed with the supplier which often takes 1-2 business days and the wine may have been sold to someone else in the interim.

What you should expect

1.  "Garbage in, garbage out" - I'm exaggerating to make a point but given the 5 factors noted above, is it really a surprise that advertised wine is often not available when you call?
2. Hot wines - Newly reviewed wine with high scores tends to create a feeding frenzy among collectors looking to buy it.  Given the site update frequency and an "instant" surge in demand, you should expect to hear "sold out" or new higher prices for legitimate reasons.
3. Non-sponsors - Winesearcher charges retailers $3,150 per year for priority display of the retailer's listings in the free version of their site.  If a retailer is spending that much, their interest in maintaining daily, accurate price lists is probably higher than a non-sponsor.  Sponsor names are bolded and non-sponsors are not.  So if you encounter a non-sponsor, I would expect a higher probability of less accurate inventory information.

A recommended strategy for users

1. Subscribe to Winesearcher Pro - As pointed out in a prior post, this is a no-brainer.  Do it as the enhanced features provided are essential for dealing with the inherent data issues already noted.
2. Read price date stamps - Every price is date-stamped.  Older prices are more prone to problems.
3. Report problems - On every results page, Winesearcher has a feedback link for reporting issues with data.  They are very responsive.  For the sake of the community's use of the information, please take a minute to report problems.
4. Exclude merchants - The Pro version of Winesearcher enables you to exclude merchants from being displayed in the results of your searches.  So if you've concluded a particular merchant never has the wine when you inquire, or is unable to ship to you, just exclude them.
5. Developed preferred retailers - There is more to buying wine than the absolute lowest price.  Read another prior post: "Buying smartly from wine retailers."
6. Use Vinfolio's quote request service - If you're having a hard time tracking down a wine, let Vinfolio do it for you.  We accept quote requests on literally any wine.  If we locate it amongst our suppliers or customers who use our free VinCellar online cellar management software, we'll quote you a price with no obligation to proceed.

Ideas for improving Winesearcher and other search engines

1. Develop retailer rating system - The user community can police bad retailer practices.  Most price comparison engines in other sectors provide this capability.
2. Eliminate "sold out" prices - This data is not relevant to any user and contributes greatly to the effort required to actually locate a retailer with the wine to sell. It also skews the validity of the price data displayed as often the lowest prices are the ones where the wine is unavailable.
3. Identify brokered wine to users - Each price should have an attribute which identifies it as a price representing a brokered wine versus a wine that is owned by the retailer and available to sell immediately.  Note that "available to sell" could mean the wine is "in stock" or still on "pre-arrival."  The retailer should have an invoice confirmation from its supplier for wine that is available to sell immediately.  E.g., Vinfolio often sells wine on "pre-arrival" as we start selling it as soon as we've purchased it.
4. Display quantity available - For any retailer providing a data feed to Winesearcher, providing quantity available information is easy to do.  The quantity is obviously accurate only at the time of submission but it still provides an indication of the maximum quantity likely to be available.  While it won't be possible to capture this information from all retailers, those that provide it are likely to get a higher degree of patronage from Winesearcher users.  This should motivate others to work towards making it available.
5. Enable greater filtering of results - Why not let the user filter on the date of the price listing, a new "quantity available" field, or on whether the wine is brokered or available to sell immediately?

 Have other ideas?  Post a comment.

 

Five tips for gaining an edge when buying wine from retailers:

1. Identify your preferred wine retailers – Who offers what you like to buy?  Are prices consistently fair or do you feel the need to check them on Winesearcher.com every time?  See prior post on Criteria for selecting a good wine retailer.
2. Concentrate your purchases – There are two primary reasons to do this.  Whether formally or informally, most retailers will offer higher spending customers access to hard-to-find or highly allocated wines before others as a reward for their past purchases.  Second, if you’re shipping wine, it’s far more efficient to do so in case quantities which are easier to hit if you buy from fewer sources.
3. Retailer’s email offers – If you want a wine listed in an offer, act quickly.  In all likelihood, thousands of others got the same email at the same time.  Better wines tend to be sought after and available in limited quantities.
4. Discover new inventory before email offers are sent – The secret is using RSS (really simply syndication) technology, something which Vinfolio offers but few others do.  RSS “feeds” provide real-time notification of inventory additions grouped into either predefined wine categories or matched to totally personalized criteria tailored to your particular wine interests. You decide which feeds to subscribe to (or create) and can unsubscribe any time. You also can combine feeds from multiple sources into your "reader" which provides further convenience in grouping related content from different sources. Learn more by visiting our RSS page.
5. Use Vinfolio’s “quote requests” – If we don’t have a wine in inventory, find the wine in the “Other results” tab within our wine store and click on the “Get quote” button.  Our buying team will seek out the wine and provide a price quote if found or we’ll monitor availability and notify you automatically if we come across it in the future.  There’s no obligation to proceed if a quote is provided.  Requests for 6+ bottles or valued at $250 or more are give priority.

This post was inspired by a post on Vinography titled “Is that e-mail wine offer a good deal?”

My post the other day stressed the importance of using a good wine retailer as a source of advice and recommendations. But, how do you find one? What criteria should be considered? Here's my list:

1. Price competitiveness – Are mark-ups fair and consistent? Or do you feel the need to “price check” every purchase against alternative sources?
2. Selection – This encompasses both the number of items carried as well as the quality level and price points within a category. Does the retailer’s relationships enable unique wines to be offered not generally available elsewhere? Are mature wines from private collections available? What about a large and small format bottles?
3. Special orders – Can the retailer accommodate finding a “wish list” of your wines that they may not normally carry? Are there minimum quantities required?
4. Reviews and other data – Does the retailer share all available reviews, good or bad, from major critics to save you the time of researching them independently? Does the retailer author their own reviews? What about comparative retail or auction price data?
5. Staff wine knowledge – How deep is it? Can you easily access advice and recommendations? Do you have a single point of contact that is “your” person? Are recommendations tailored to your interests? Are there frequent tasting or other wine education opportunities (including foreign travel to wine regions or expositions) made available to staff?
6. Ease of ordering – How easy is it to buy? Is their wine inventory online updated in real-time? Is the stock status of the wine disclosed (i.e., in stock or pre-arrival)? Is the purchasing process streamlined and time efficient? Are orders confirmed promptly?
7. Customer service – Is it clear from the retailer’s site that service is a priority or is it an afterthought? Is there a dedicated customer service staff? Is it easy to figure out how to make contact with someone who can solve a service problem? Can you track the status of your orders online? What about online copies of purchase invoices? Is there a robust FAQ section of their web site?
8. Return and cancellation policies – Are there written, published policies governing returns and cancellations (plus all other aspects of conducting business with you)? Can you return a corked bottle or otherwise faulty bottle without a hassle? What about guarantees on receiving pre-arrival purchases?
9. Climate-controlled warehouse – Does the retailer store its inventory of wine in appropriate 55 degree and 60-70% humidity conditions? Can you keep your purchases there at no charge for a reasonable period? What if you need to store for an extended period? What about purchases made elsewhere? Are fees by the case?
10. Shipping – Does the retailer ship to other states? Internationally? Are tracking numbers automatically sent upon shipment? Are you notified about failed delivery attempts? Are shipments insured automatically or are there additional charges? How competitive are the shipping rates? Does the retailer have policies in place to ensure shipping only during appropriate weather conditions? Can the retailer assist in arranging freight forwarding services for large shipments (e.g., 40+ cases)?
11. Local Delivery –Does the retailer offer local delivery services in your area? Are the retailer’s delivery trucks temperature-controlled? Is there a minimum required to have a free delivery? What are the other terms?
12. Selling customer wine – Does the retailer assist customers in selling their wine? Will they buy properly cellared wine for cash or store credit?
13. Other wine collector services – Does the retailer provide other collector services you might need such as in-depth collection-building, on-site wine inventorying, and valuation reports?
14. Management and company stability – Are management backgrounds available on the site? Do they have appropriate business backgrounds? Is there a solid board of directors and/or advisors involved in the business? From press releases and news articles, does the company appear to be growing and financially sound?

If you have another criteria you feel are worth considering, please post a comment.

The following thread titled “Heritage Wine Co. – cover your ears. Retailer flames out of control” from Mark Squire’s Wine Bulletin Board on eRobertParker.com has to be read to be believed. At the time of this post, it has attracted over 100 comments in less than a day.

The retailer’s overreaction to a customer complaint is inappropriate but what bothers me more is his failure to take responsibility for his own pricing mistake. In this case, it was a small dollar amount too but even if it weren’t, one way to learn from mistakes is to have to bear the cost of them (financially or otherwise).

Everyone makes mistakes. For example, we mispriced a cult cabernet last week at $295 when it was supposed to be priced at $350. We didn’t realize the error until a customer had already bought 6 of our 12 bottles online. Of course, we honored the transaction. The only discussion we had was to determine how the error was introduced so we can avoid repeating it.

Do you have a story to share of wine retailer behavior that provoked a negative reaction from you? Please add it as a comment (no need to post retailer names if you’d rather not).

P.S. For another post on retailer practices, read “Returning faulty wine to retailers.”

I noticed a thread on the Squires Board today titled "Retailer emails: how many is too much?" The poll in the post asks readers to vote on which of five statements they most agree with ranging from "Two emails per week is excessive (from one retailer)" to "Send as many solicitations as you like." Interestingly, with about 70 votes cast at the time I checked, each of these extreme positions garnered the same percentage of votes (15%). Interpreting the other results, over 40% were gladly willing to receive as much as one email offer per day.

Arguments for more frequent email offers

• You are kept updated as to what's new and current market pricing levels
• Limited quantity wines can be quickly ordered before they sell out
• You can unsubscribe any time or set up an Outlook rule to autofile emails into a folder for later reading
• They're easy to delete

Elements contributing to a "high annoyance factor"

• Some retailers resort to hype and hucksterism in every email
• Many offers provide little value-added or context for the wines promoted (including creating needless inbox clutter with nothing but single-wine email offers)

You have a choice

Antispam legislation requires email solicitations to provide the ability to "unsubscribe" in every email. The complainers know this but they still complain rather than just opt out. The fact that most stay subscribed is a tacit admission that they get some value from the emails and are reluctant to go to the extreme of stopping them altogether for fear of missing good buying opportunities.

The real problem stems from the fact that wine consumers range from the serious wine collector to the casual wine drinker who have different inherently different interest levels in wine. This translates into different tolerance levels for receiving wine-related promotions in email or other forms.

What's the solution?

The solution for a retailer is to care enough about meeting the needs of his different customer types to provide a variety of alternatives to cater to every preference.

Here 's what Vinfolio does with its email offers and why:

• Daily frequency - We generally limit ourselves to one email offer per day and provide an option to receive just a weekly California-only email. We think this frequency strikes the right balance between different interests when combined with other alternatives we provide (see below).
• Value-added content - Our emails are generally thematic around a producer, region, varietal, or type of wine (e.g., bubbly or port) to provide greater context for making a buying decision. Offers are typically 5-10 wines but can be less or more. Scores and full text reviews are provided. Additional background on the vintage or producer is often added to provide an educational component.
• Ordering links provided - Our emails allow you to click on "Order Now" or "Add" buttons which take you to our site and initiate the ordering process to provide greater convenience to the buyer.

We also provide various alternatives to email offers if you choose to opt out:

• Offers archived on site - You can always view an archive of offers whenever you wish.
• Browse our wine store by offer - One method of browsing is to select wine grouped by what appeared in a prior offer. See the left side navigation of our wine store page.
• RSS "feeds" - This is the best solution. RSS feeds provide real-time notification of inventory additions grouped into either predefined wine categories or matched to totally personalized criteria tailored to your particular wine interests. You decide which feeds to subscribe to (or create) and can unsubscribe any time. You also can combine feeds from multiple sources into your "reader" which provides further convenience in grouping related content from different sources. Learn more by visiting our RSS page. Vinfolio is among a handful of wine retailers who currently offer this capability.

Bottom line: Wine collectors are discriminating individuals by nature and used to getting what they want, which extends to defining how they wish wine retailers to market to them. You should demand more choices from your preferred retailers or simply try us.

Bill Nanson's Burgundy Report blog has a great post today titled "Merchants and faulty bottles...some advice...".

Vinfolio's guiding principle is "Fine wine. Finer service." One of the ways we implement "finer service" within our retailing activities is by promptly resolving customer service issues such as the faulty bottle scenario which Bill Nanson describes. I particularly agree with his point that "there's a big difference between 'fault' and 'responsibility'." Regardless of the rigor we employ to source flawless bottles, such as sourcing from reliable suppliers and inspecting all wine before sale (see our wine inspection guidelines), it's impossible to catch everything (e.g., I know of no way to detect TCA without opening the bottle). However, we recognize that the lifetime value of a customer dwarfs the cost of resolving an occasional problem (even though our retail margins are thin too).

Responsibility is also a "two-way" street. The customer may decide to save a few dollars when shipping and not adhere to our recommended shipping policy. If we conclude that this is what caused the problem (such as a leaking bottle shipped in warm weather), then the customer bears responsibility for his own poor judgment.

The net result of our philosophy is our wine guarantee and returns policy. I haven't seen a more robust published policy from any other retailer.

A few further comments:

• Most retailers don't even have a published policy except perhaps caveat emptor.
• Some time limit after sale is required although we may choose to waive it based on circumstances.
• We may ask for questionable bottles back but not usually on the first few requests from a given customer. We understand that it's inconvenient but it may be required of us to obtain a refund from a supplier. Only if a particular customer is returning bottles frequently would we wish to double check the customer claim.
• We cover round-trip shipping should any bottle be sent back and replaced.

I would love to hear any comments on how we can improve our policy.