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Amazons New Push Into Wine

Columnist: Tim Carl
October, 2019 Issue
Columnist

Tim Carl
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In August 2017, Amazon purchased Whole Foods Market for $13.7 billion and gained a mainstream grocery brand with more than 430 physical stores, a well-oiled supply chain and 330 liquor licenses across 41 states. In December 2017, Amazon ceased their dedicated online Amazon Wine program to focus their alcohol sales toward more on-demand services such as Amazon Fresh, Prime Now and Whole Foods Markets.


A year later, Amazon announced plans to launch 2,000 Amazon Fresh-branded grocery stores, referred to as Amazon Go, that would carry wine. Today, there are dozens of these high-tech shops around the country, including four new locations in San Francisco. The way these artificial-intelligence-filled futuristic markets works is that shoppers use a digital shopping cart either while at the store or from home. No matter where the items are ordered, customers have the option of picking them up at the physical location by filling their own shopping bags and then walking out of the building without waiting in a checkout line. Amazon automatically charges their account for items taken.

Wine delivery

Already a dominant force within e-commerce, Amazon’s strategy of late has been to enter the world of brick and mortar. These locations provide customers with places to commune, eat, taste, test and explore other featured items and experiences. Another benefit of these physical locations is that they act as warehouses for delicate items, such as wine, that can be included within high-speed on-demand delivery options.


In a move that signals Amazon’s move into the on-demand delivery of wine, The San Francisco Chronicle reported that the Seattle retailer filed an application with the state of California in August for an alcohol license which, if approved, would allow delivery of wine, beer, cider and spirits.

Will Amazon dominate wine retail sales? Step into any of the few remaining family-owned wine retail shops around the area and you’ll notice a few changes compared with just a few years ago. Most likely there is a lot less inventory on the shelves, and the range of choices is limited. Most of the non-owner expert salespeople have moved on, finding alternative work in a winery’s tasting room or perhaps as wine-distributor reps. These once vibrant and important locations for wine aficionados—new and old alike—look a lot like record stores or small bookshops back in the late 1990s and early 2000s.

In 1994 Amazon was founded by Jeff Bezos with the intent of becoming the primary source of retail sales in the United States and beyond. The benefit to customers was to lower prices and increase access. In a move widely anticipated at the time, Bezos soon launched his own line of Amazon products. The result allowed Amazon to privilege its own products and services, while at the same time allowing the gobbling up of any new offering that was becoming popular with its customers. It was like this: If customers began ordering more headphones through its website Amazon knew it—they were collecting the sales data. With that info in hand Amazon would often just go out and purchase the most popular maker of headphones, and then lower the price on them and place the brand on top of the headphone product page on the Amazon site.

Supporters of such tactics point to lower prices and ease of access, while critics (including in this example many of the competing headphone makers) point out unfair practices that ultimately reduce consumer choice by pushing out competitors. The other concern was that such practices siphoned money away from smaller companies and placed those resources in the hands of a few often-non-local individuals.

Fine wine is a unique and locally specific product. As Amazon begins to ingest wine into its strategy for retail dominance, small businesses have the opportunity to renew their dedication to supporting small local producers and build more meaningful relationships with their customers. Communities will eventually thank those who survive the next onslaught for their resolve. There is no way to go back, but there are different ways forward, even when the biggest current looks so swift and sure.

 

 

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