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Wine eCommerce

BUS-800-102-14-SU:Wine eCommerce

Presented by: Ron Scharman

May, 7. 2014Session:1

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Wine eCommerce

1 Where Are We Headed

2 Who Am I and Why Am I Here?

3 The Past, Present, and Future of Wine Commerce

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Wine eCommerce

Wine eCommerce

vs

Wine Commerce

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Wine eCommerce

Got Wine?

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Wine eCommerce

QUESTION FOR THE SEMESTER:

How do we sell a 3-dimensional

story in a 2-dimensional world?

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Wine eCommerce

THE TRUTH IS, ITS HARD. VERY HARD.

It is hard to capture the essence of your brand online. This is everyone’s challenge.

Visitors are exposed to a number of stimuli that help frame their experience at your

winery. They breathe fresh warm air that blows across the valley floor as they enjoy

expansive views, marvel at architectural details, and soak in the overall ambiance of your

tasting room during their visit. All of these things help engage and interest them.

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GROWTH STATS

The consumer direct channel of the wine industry is the fastest growing and most

profitable channel.

Do you have all the tools necessary to be successful and ride the wave?

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GROWTH STATS• 2013 U.S. wine shipments grew 3% to 375.2 million cases with an estimated retail

value of $36.3BB. This represents 21 consecutive years of volume growth.

• The U.S. has been the largest wine consuming nation in the world since 2010.

• Direct to Consumer (DTC) shipments by US wineries grew at an impressive 7.5% in 2013, hitting a record $1.57 billion. Total volume was 3.47 million cases, up 9.3% over the prior year.

• Direct-to-consumer shipments in March grew 20% over the same time last year and were up 10% over the past 12 months. The total value of March shipments hit $213 million.

*Data from Wine Institute, Wines&Vines, & ShipCompliant

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EFFECTS OF 2005 SUPREME COURT RULING

Supreme Court decision on May 16, 2005 changed forever

the wine landscape for the direct-to-consumer wine

market. The Court’s majority opinion stated, "If a state chooses to allow direct

shipments of wine, it must do so on evenhanded terms."

The Court ruling: Regulate, But Do Not Discriminate

The States response: Regulate, Don’t Discriminate, But Do Complicate

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EFFECTS OF 2005 SUPREME COURT RULING

“There is tremendous change rolling through the industry right now - it is a sea of change,

just beginning to be felt”

- John HinmanLeading San Francisco Wine Industry Attorney

“With the complexity of rapidly changing state regulations, it is essential that every wine producer, regardless of size, ensures

they have an auditable, fully compliant shipping process. The industry needs

service providers that can guarantee legal access, with a certified audit trail, for direct-to consumer fulfillment.“

- Steve GrossState Relations Manager, Wine Institute

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OPPORTUNITY OF THE DIRECT TO CONSUMER MARKET

Granholm Supreme Court decision forever changed the wine landscapeOpened and complicated wine distribution

Set the stage for profit center focus on winery direct

Created the environment for mid and large sized wineries

Highlights the bottlenecks in current distribution and creates a split between two channels

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OPPORTUNITY OF THE DIRECT TO CONSUMER MARKET

Domestic / Intl Wine Producer

Wholesalers Retailers / On Premise

Consumers

Direct to consumer 10% of sales ($3.2BB)

Wholesaler distribution 90.0%

of sales ($36BB)

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WINE INSTITUTE LATEST UPDATE

45 States out of 50 have some provision for winery direct shipping to consumers.

Importers and internet retailers are restricted to fewer states, depending on method of shipment and licenses held.

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WHAT’S CHANGED? BIG COMPLEX SITES

2003

2014

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THE WEB HAS BEEN GROWING FASTER THAN STORES….

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

-5%

0%

5%

10%

15%

20%

25%

30% 27%25% 24%

20%

3% 2%

16% 15% 16% 17%

6% 5% 5%3%

0%

-3%

2%4% 4% 4%

Annual growth rate 2004-2013* eCommerce versus retail spending

Growth in e-commerce Growth in non-e-commerce retail

*Source: U.S. Commerce Dept., Internet Retailer

Note: All other retail sales excludes auto dealers, gasoline stations and fuel dealers, and restaurants and bars.

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MORE PC’S GATHER DUST

*Source: U.S. Commerce Dept., Internet Retailer

44%

11%

45%

Percentage of time on retail web sites

SmartphoneTabletPC

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MOBILE COMMERCE SOARS

Source: *IBM; **Adobe

• Mobile devices accounted for 23% of online retail sales over 4-day 2013 Thanksgiving weekend*:

• Tablets 16%,

• Smartphones 7%.

• Mobile commerce sales grew 80% on Cyber Monday over the same day last year.**

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THINGS TO WATCH: MILLENNIALS

The crowd is here

Comfort level with mobile transactions

Ease of purchasing

Millennials

Growing FAST!

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OMNI-CHANNEL RETAIL

Today’s shoppers expect a single shopping cart that follows them on

their customer journey

THAT MEANS through multiple touchpoints – instore, online or on

the move – so that customers have a seamless experience.

Omni-Channel

Retail

Direct to Consumer

Retailers

Direct Sales

MarketingWine Club

Events

eCommerce

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OMNI-CHANNEL RETAIL

DISCOVERY• Search engine• Word of mouth• Advertisement• Social Media

ENGAGEMENT• Visits website• Visits tasting

room• Social Media• Mobile

ACQUISITION• Purchases wine

online• Buys wine in

tasting room• Joins wine club

LOYALTY/LOVE• Email

communication• Facebook shares• Special events• Ratings

D E A L

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WINERY COMMERCE ECOSYSTEM

Mobile Commerce

Wine Apps

SMS Text

Commerce Anywhere

Pop Up

Virtual Commerce

Social Commerce

Facebook/Pinterest/Twitter

Crowdsource

POS

Mobile POS

Kiosk

Tasting Room

Wine Club

Allocation/Mailing List

Email

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HOW IS WINE SOLD?

Winery Retailer – 8,000+ wineries in North America

Internet Retailer – Wine.com/Thousands of 17/20’s

Discount Internet Retailer – WineAccess.com

Marketplace – VintnersAlliance.com

Community Member Site – WineCommune.com

Flash Sale/Daily Deal Site – WinesTillSoldOut.com

Affiliate Marketing Site – Bottlenotes.com

Wine Auction Site – WineBid.com

Direct to Trade Site – WineTradeDirect.com

Growing Number of Wine

CommerceBusiness Models

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Questions?If you have a question please type it into the Questions box on your screen.

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USING YOUR WEBSITE TO TELL YOUR STORY

Strong branding is key Include rich contentUse the tools built into your

website to improve your SEO Gather data and market smartGo Mobile!