Clarifying the rules of compliance: A Q&A with Matt Mann, Part II
As more wineries venture into the territory of shipping product direct-to-consumer, it's important to know the rules of compliance. We continued our discussion with our Director of Compliance/Legal Counsel, Matt Mann, about how business owners can embrace the D2C market.
What's the most common problem related to compliance that wineries experience when it comes to completing D2C orders?
The biggest compliance hurdle in getting the wine into the hands of the consumer is the adult signature requirement - which is in place for a reason - and I think a valid requirement. Nonetheless, it makes it difficult to ship to a residential address instead of a commercial address because many people work during the day and there's no one there to sign for the wine. Most consumers are unaware of this requirement and educating consumers of the rules, and why those rules are in place, will help alleviate that problem.
The other problem is that Amazon has changed the world of shipping and delivery, raising the bar so high, that it has changed consumer expectations. That same expectation level is set for wine, even though wine is a highly-regulated product, and sometimes the consumer does not understand that, which makes it more difficult. It's a matter of meeting the customer expectations and enhancing the customer experience despite that limitation. I think that's a huge problem wineries run into and companies like ours work as best we can to overcome.
What would you say are some misconceptions that wineries and retailers have about D2C compliance?
One misconception is that compliance is too confusing to the point of not being worth doing, or even impossible to do. There are resources available, however. The Wine Institute website is a fantastic source. It is pretty much a central hub of rules and regulations with a database you can access to determine the rules of the road to whichever state you wish to ship. You can access this information without having to go to each state website and figure it all out. While it can be confusing to the uninitiated, it's not undoable. There's actually a tremendous amount of uniformity in the way the rules are written and in what they cover.
The other misconception is that it's prohibitively expensive to maintain all of the state licenses. Relative to other marketing costs you could incur in terms of, say, print advertising or radio advertising - other things you do in order to reach market - it's relatively inexpensive.
One other misconception: “I don't have to follow the rules, states aren't watching anyway.” That's usually where you get into trouble. States are paying attention for the mere fact they are interested in collecting every bit of revenue that is due.
What can wineries do to make the entire process of compliant shipping easier?
First and foremost, you need to educate yourself. You can't go into it haphazardly. Develop a strategy. Plan a D2C program. What states make sense? You may not want to get permits in all states. You can eliminate some of the administrative burden just by being selective in where you want to ship. Whichever strategy you choose, think it out before moving forward and you will minimize difficulties.