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Behemoth Begone

Columnist: Christina Julian
February, 2018 Issue
Columnist

Christina Julian
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I’ll admit it. I am addicted to Amazon. I can say this here, but as a debut author, if I were to mention this in writer circles, I would be excommunicated indefinitely because Amazon is to author and publisher—the antichrist—gobbling up the lion’s share of the market and profit. But like any good addict I see past all the evils because my fix was born out of necessity. 
 
When the twins were born, tearing through 20 diapers a day and inordinate amounts of formula because my supply was unable to keep up with the demand, I turned to “the giant.” I had zero time or energy to head up and over the hill to Costco or Target to get the goods. Through the voodoo magic of Amazon Prime, my merch arrived before I even knew I needed it because that’s what retail gods do—they deliver. Four years later the addiction stands but I do have limits, I have never bought wine through the channel. Thankfully so, because with the acquisition of Wholefoods, Amazon closed its virtual wine store in December. 
 
Yet for every loss someone stands to gain. Napa-based company WineDirect, billed as one of the only direct-to-consumer (DTC) wine sales and fulfillment companies, offers Amazon-like marketplace distribution to its clients through partnerships with key retailers like eBay, Vivino and travel loyalty programs. The company’s president and CEO Joe Waechter estimates Amazon sold as much as $3 million in wine a year and feels WineDirect is well-poised to pick up where the mega retailer left off. “It’s a good opportunity for us because wineries that were dependent on Amazon for orders are coming to us and asking how we can help.” 
 
WineDirect, which distinguishes itself with end-to-end ecommerce and fulfillment solutions that employ handling systems used by the world’s ecommerce leaders, grants an option beyond the three-tier distribution system for those wanting to capitalize on DTC sales opportunities. “Small to mid-sized wineries haven’t had a choice because distributors won’t return their calls and they needed a solution to sell online. We’re able to tap large, high-growth marketplaces that efficiently access large numbers of new buyers for our clients.”
 
Waechter notes the off-balanced equation of 9,000 wineries and only 700 distributors, which leaves many wineries with no means for meeting increasing demand. “Online wine sales have been one of the fastest growing channels in the last few years and we believe that growth will continue to accelerate from 3 to 4 percent, to as much as 20 percent, of the $50 billion wine industry. WineDirect, which currently serves 1,700 clients, offers the infrastructure to handle the load with solutions that enable wineries to sell and ship direct to consumers.” 
 

Taming the beast

The three-tier distribution system is a behemoth in its own right. Many feel the model is antiquated and not as flexible as it should be to meet the demands of today’s ever-changing market. On the one hand, it enables wineries to earn revenue from consumers they might not have access to outside the tasting room. But the terms aren’t always favorable to suppliers, nor is the model as inclusive as it could be, often leaving small- to medium-sized wineries out of the inner circle. San Jose based LibDib (Liberation Distribution)—dubbed the “Airbnb” of alcohol distribution, hopes to change that with its unique platform. 
 
The company, which launched last spring seeks to plug a hole left by the traditional tiered system by serving small- to medium-sized makers of wine, beer and spirits with its on-demand ordering system. The company likens its platform to ecommerce sites like Amazon, but with backend biz going on behind the scenes, that directly connects makers around the globe with restaurants, bars and retail shops (RB&Rs). The technology centric platform allows RB&Rs to discover small lot makers by drilling down on categories such as variety, ratings, vintage, price and more, with LibDib collecting a 15 percent cut. Governed by standard distribution regulations, the platform currently serves RB&Rs in New York and California with plans to add other markets in the future, with Wisconsin and Nevada in the works.
 
While winemaking is an ancient tradition, the means for making and disturbing the juice continues to evolve at the hand of technology. This levels the playing field between the big and little dogs in a way that smacks at how Amazon leveled (or is it monopolized?) the book industry for the indie and conventionally published author. 
 
Waechter adds, “Consumer expectations for exceptional shopping experiences and fast, free shipping have skyrocketed in recent years. This poses a very real threat to wineries: master ecommerce and optimize their business for the digital age—or risk being left behind forever.” Spoken like a retail god in the making. 
 


 

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