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Wine.com Readies New Marketplace to Battle Amazon

Just in time for the holiday selling season, the online wine wars are heating up.

Wine.com, the leading online wine retailer, said it is launching the Wine.com Marketplace, which will allow smaller domestic and international wineries with limited distribution channels the ability to sell its wines on Wine.com.

"Over the past 14 years, we've developed relationships with thousands of wineries of all sizes, all around the world," said Rich Bergsund, CEO of Wine.com. "Often, these wineries lack partners to help sell and distribute their vintages."

While Wine.com's core business model will remain sourcing wine from wholesale distributors, the new program will allow small production, tasting-room-only and boutique-type wineries to sell wine through the Wine.com website.

Wine.com is making it easy for the small wineries to sell on its site. Wineries will be responsible for delivering their wine to a Wine.com-licensed storage facility, providing wine content such as winery description, tasting notes and attributes about each wine for consumers to access when searching the Wine.com site.

Wine.com will handle the backend logistics: state-by-state regulatory compliance, warehousing, fulfillment, packaging and delivery, including paying the shipping charges.

"This is a huge difference in the winery economics" says Bergsund. "Wine.com is managing the entire supply chain for the wineries, saving them money."

While its good for the small wineries, it also opens new territory for Wine.com to market itself to the serious wine shopper. (For More: Uncorking the Fine Wine Market)

"The Wine.com Marketplace will champion imported and domestic wines," Bergsund continued. "Wine.com consumers will access Marketplace wines in addition to (our thousands of) distributed wines, so the selection is, and will be far more compelling."

Wine.com began beta testing the Marketplace concept earlier this year. An official November launch allows the company to take advantage of the holiday season, which is a crucial one for wine retailers. Wine.com estimates 30 percent of its annual sales occur during the month of December.

Then there is the Amazon issue: recent reports that internet giant Amazon.com is preparing its third attempt at the online wine business, perhaps as soon as this week.

Wine.com may be the most visited wine website, but Amazon's online prowess is enough to make anyone not named Apple, Google or Microsoft tremble.

Amazon attracted 106,326 unique visitors in September 2012, making it the sixth-most visited online property that month, according to ComScore.

Amazon hasn't officially announced its program, and won't comment on its intentions, but the Santa Rosa Press Democrat has reportedly seen a document which details Amazons plans.

According to the Press Democrat, Amazon would be acting as a middleman, with wineries paying Amazon for the right to sell their wines on the site. When a sale is made, the individual winery would be responsible for the fulfillment of the order.

Another key battlefront in the online wine wars: free shipping.

According to the Press Democrat, an Amazon wine service would not be part of its Amazon Prime service, which offers free shipping for $79 per year.

Wine.com has made significant headway with its Steward-Ship program, which allows for free shipping on all orders at a cost of $49 a year.

According to Wine.com, Steward-Ship members spend 30-percent more per order and five-times more per year than non-Steward-Ship members.

Online wine sales currently make up only one percent of the total $25 billion dollar wine market. However, adding Amazon into the mix can surely help grow the whole pie, if they don't devour everyone else at the table.

Bergsund likes his chances.

"We've seen this movie before. We welcome the attention Amazon can bring to the idea of buying wine online, but the mass-merchandising approach doesn't always win with the customer. Remember Zappos and Diapers.com," he said. "We will continue to compete through innovation to be the best in our category on behalf of our customers."

-By Tom Rotunno, CNBC Senior Editor; Follow him @tomrotunno.

Questions? Comments? Email us at consumernation@cnbc.com.

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