Amazon's Grab at the Wine Business

The online retailer could buy wine in a quantity that would bring new meaning to the word “bulk.”

A couple of weeks ago, word broke that Amazon was poised to sell wine directly to consumers, with help from Napa's New Vine Logistics, which is already legally set up to ship to 44 states. How Amazon decides to sell and ship wine doesn't really matter to the consumer, but the potential impact of Amazon entering the wine business should scare the ever-loving crap out of every wine shop in town. They needn't look any further than Amazon's initial entry into the book market (to make no mention of its Kindle rollout), which made good on its promise of rendering the corner bookstore an endangered species. I don't want to bore you with the endless minutiae that make up the legalities of the "three-tier system" of selling wine now employed by each state. In a nutshell, the structure of putting a wholesaler between retailer and producer is a scheme left over from the end of Prohibition. The thought is that government can regulate the middleman to cut down on any shenanigans between sources and retailers, as well as make sure markups are made and taxes are paid, especially in a greedy, booze-hostile state like ours. This is what makes online wine retailing so difficult on a national scale; every state has its own hurdles, and that's why a company like Amazon would want to work with someone else for fulfilling orders. And New Vine has the necessary infrastructure. The shipping situation has partially protected freestanding wine shops from the second half of a one-two punch delivered by discount retail (Costco's wine pricing being the first). and have each enjoyed measured success, but they just aren't Amazon. They are specialized, whereas Amazon is already part of the average consumer's life—same as McDonald's or Target. If Amazon becomes a wine retailer, the company will have tremendous clout with wholesalers, able to buy wine at a discount in a quantity that makes the word "bulk" seem highly inadequate. Their selection will be unrivaled. In short, the plight of the independent bookseller is about to become the plight of the independent wine retailer. Think about the ways Amazon cross-markets on its Web pages. Think about all the people who want what they want right now, people who will be far more satisfied with a "buy now" button than from hearing "We could order that for you." There is no search capability in the brick-and-mortar world; the potential clusterfuck of having any given wine shop find any given wine at any given time is aneurysm-inducing. Seattle ranks as one of the most literate cities in the country. If someone already has Amazon Prime, likes to read, and enjoys a good nip, most likely Amazon's going to get them on a one-stop, one-click basis for at least one wine category, be it a favorite port or chardonnay. How long until these people start ordering the lion's share of their wine online, in their underwear? Before it's too late, wine shops should ask themselves: What are you doing to keep customers from comfortably ordering wine from home? What services do you provide that warrant an extra trip or the extra wait? Learn from the complacency of the book industry and start kissing your customers' asses now, big time—while they're still wearing pants.

comments powered by Disqus

Friends to Follow