Amazon thinks so.
For the past two years, Amazon.com has been working to develop a wine branch within their retail empire. October 22, Wine Business.com announced that Amazon had notified participating wineries that they are suspending the program. Originally designed to launch in October 2008, the Amazon wine program has been plagued with delays and obstacles.
A lot of anticipation surrounded the proposed Amazon wine launch for several reasons:
- Participation in the wine business by this giant retailer was seen as heralding US as becoming a “wine drinking economy”
- The power and magnitude of exposure on one of the nation’s biggest retailers
- The Seattle based retailer was going to feature American wine with an emphasis on Napa Valley and Washington wines
- Wine shipments were eligible for Amazon Prime, free shipping for a flat $79 annual fee.
Although Amazon has not released specific rationale for terminating the program, most pundits are pointing their fingers at the difficulties in shipping across state lines. Although 35 states allow direct wine shipments, even those 35 states have their own rules and regulations pertaining to the shipping process. Currently, only 7% of wine is sold via ecommerce and the theory is that these shipping regulations and shipping charges are largely to blame. Amazon hoped to circumvent the regulation issues by out sourcing the wine order fulfillment to New Vine Logistics, a California based company specializing in wine shipments. New Vine had their own share of financial problems and they suspended operations over the summer. New Vine received funding from Inertia Beverage Group and is up and running again. Yet, Amazon still suspended their own wine business operation plans.
Another potential complication is related to the perishable nature of wine. Wine can not be shipped in very hot or cold conditions. It can not be left out on a stoop in inclement weather and usually requires an adult signature for receipt. If no one is home to sign, it has to go back on the truck. Amy, of MyDailyWine Blog, points out two additional factors that may make wine e-commerce appear less lucrative at this time:
- wine consumers have yet to develop the habit of purchasing their wines online
- wineries and distributors have been hesitant to to explore and adopt online sales and marketing channels
Not everyone believes that these are obstacles are insurmountable. Amy pointed out not only current obstacles but also talks about how they are shifting. Vintank, a digital Think tank for the Wine industry is concerned that the others will give up or write it off as impossible.
Wine order fulfillment may not be suited for a huge international retailer that is always juggling a lot of balls, but that doesn’t mean that there isn’t a business model that can do the job. Another group, Free the Grapes, is working hard to change the shipping regulations, to untangle some of the current complications. Ship Compliant is a company that provides software to assist wineries and distributors in navigating the various rules and regulations and get their wines into the consumer’s hands.