Amazon is apparently once again toying with the idea of selling wine online direct to consumers. WSJ reports that anonymous tipsters from wineries across Sonoma and Napa who attended a workshop under NDA (non-disclosure agreement) say Amazon will charge wineries $40 per month to participate, and take a 15% commission.
Word is Amazon will roll out the new wine marketplace within a month, “in time for the holidays.”
Various articles over the past few days – see here and here – essentially re-affirm what WSJ is reporting, but as of yet there is no official confirmation. So treat this as I would a Nexus smartphone rumor: with a grain of Nexus salt. Then again, the rumor mill has been remarkably prescient in recent times thanks to the transparency and speed of social media.
When it comes to alcohol sales and shipping, state regulations can be a finicky thing. Or, more aptly for many, an infuriating thing. In their view, intervention by state Government with respect to allowing wineries to ship direct to consumers is heavy handed; worse still the application of laws has been inconsistent especially towards small wineries who could potentially benefit from shipping their wines direct to consumers across the country. Instead, the “three-tier” system is often employed whereby a middle man gets a cut of the action. In some states, like Alabama for instance, direct-to-consumer wine sales are strictly prohibited. Consequently consumers have less choice. For more on this matter, I defer to one of the industry’s most foremost experts on the topic, Tom Wark, who writes regularly about the topic on his well-regarded, highly cited Fermentation wine blog.
Presumably this would be a drop ship model, whereby Amazon would act purely as a marketing and processing engine. It would carry no inventory. Instead, wineries would handle shipping. In exchange, they would get massive exposure on the world’s largest online retailer.
As a Prime customer, I wonder if Amazon will offer us the same free two-day shipping deal, or some sort of other sweetener. In addition to the expedited shipping available on many products, the Prime program (which costs $80 per year) provides customers with access to a Kindle rental library, and thousands of free streaming movies.
Also see: A salute to wine harvest 2012
Regarding competition, if Amazon does create an online wine marketplace, I see the move impacting Costco the most. Costco is currently the largest retailer of wine. But if Amazon brings the appeal of low price thanks to its scale (and some would say Walmart-like predatory practices applied to its supply chain) and the convenience of online shopping, many might simply order their Christmas wines, bubbly, and Napa Cabs from the comfort of their La-Z-Boys. And that, of course, is exactly what CEO Jeff Bezos and team are ready to celebrate.