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June 19, 2012 | Matthew Mann

Is Privatization Coming to a State Near You?

There's been a lot of buzz in the alcoholic beverage industry this year about privatization; the movement of the sale and distribution of wine, beer and distilled spirits, in varying combinations, from the ownership of the state government to the hands of private enterprise. The buzz started last November when Washington state voters passed an initiative to privatize the state's monopoly on the sale of spirits through state-owned stores to private ownership. It effectively removed the last vestiges of the state’s participation in the sale and distribution of spirits, although state ownership or not, alcohol will continue to be a heavily regulated, and taxed, product in the Evergreen state.

Complete or Partial Control
With the transition of Washington state, there are currently 18 states exercising some form of state "control". As is the entire system of alcohol distribution in this country, these "control" states are a product of the 21st Amendment, wherein the state regulatory agency is an active participant in the wholesale and/or retail tiers for the sale and distribution of alcohol. The degree of control can vary from total control over both tiers and all classes of alcohol to partial control over a single tier or select classes.

States such as Pennsylvania, New Hampshire, and Utah are examples of states exercising complete control of distribution of all forms of alcohol. Oregon, Virginia, and Idaho are just a few of the states exercising partial control, controlling only certain classes of alcohol such as spirits, or only certain segments of the market such as retail sales.

The “Control” Conversation
Regardless of the amount of control exercised, the results of the Washington election caused significant conversation in many of the control states about the future of state control:

Is it an appropriate exercise of state power in a capitalist society,
Would privatizing the system benefit the state and the public, and
Revenue, tax and public health implications.

Champions of the Washington initiative, including private distributors and retailers, argue it will bring more variety, accessibility, and ultimately, lower prices through competition and market efficiencies. Proponents in Pennsylvania and other states will likely make similar arguments. In the past six months Pennsylvania, one of the largest consumption states as well as one of the most tightly controlled, has been debating a bill for the privatization of their system. This follows long-held complaints about state inefficiency and disregard for the demands of the buying public. Furthermore, attempts by the state to modernize and make the system more responsive have shown only mixed success. The governor supports the privatization effort but the prospects for passage remain uncertain, as powerful opponents of privatization work to stymie the bill.

Opponents in Pennsylvania express the belief the state is the best vehicle to control distribution for public health and revenue reasons by combating alcohol abuse, preventing access by minors and profit from state sales. They point out the state derives substantial revenue from the sale of alcohol and are concerned about its loss in tight budgetary times (the state website cites revenue of over $1.9 billion in FY 2010-11). Finally, they are worried about the loss of thousands of state worker's jobs, pushed no doubt by the state employees groups seeking to protect their ranks. The arguments were similar in Washington and probably will be heard in most control states debating the issue.

What will be the result of this conversation about privatization?
Time will tell as the competitive nature of market dynamics takes place over the next few years. As with any private industry, some areas will benefit and others will not. Variety can be squeezed by supplier's market clout, accessibility will in large part be determined by location, with high population-density having greater access, while low population areas could be left without access at all if no private company chooses to service the area. Prices, well, they can be driven by supply and demand, but also by taxes, which remains under the control of the state. As part of the privatization push, Washington state taxes and surtaxes amount to about 30% of the price, so don't expect prices to come down soon.

Privatization is the current buzz, but it seems unlikely to me that it will sweep the nation. Alcohol control is an emotionally-charged, highly localized issue that defies national trends. Still, it is a conversation that needs to take place. A system not predicated on a dynamic market is subject to becoming stale, entrenched and moribund. Many of the current complaints about state control claim the system is locked in the past, non-responsive to cultural and technological changes that have transformed the country since the end of Prohibition. Whether the choice is to privatize or continue state control, the conversation forces the state to re-examine its practices, and respond to the needs of the consumer or face diminishing support from its constituency. It's hard to see the downside in that.

Jun 19, 2012 at 7:56 AM

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June 7, 2012 | WineDirect Admin

The Smart Winery’s Reaction to the Grape Shortage

The U.S. wine industry is abuzz about the impending grape shortage. What should a smart winery do? Simple microeconomics says that if demand is higher than supply, price goes up. Clearly the price for bulk grapes is going up, raising cost of goods sold for wineries that don’t have captive supply – i.e. their own vineyards. But, should a winery pass on that entire increase?

Savvy wineries have spent years and significant dollars building their brands and targeting specific consumers at specific price points. The question is, if a winery simply raises their per bottle price in reaction to the grape shortage, will it stick or will they simply price themselves out of the consumer markets they have worked so hard to target?

There is a better strategy. Every good investor has a target asset allocation. Investors allocate their investments between stocks and bonds, high yield and low risk, international and domestic, etc. Similarly, any winery that sells through multiple channels should have a channel allocation strategy. Wineries can have specific target allocations of their production to traditional retail, restaurants, on premise sales, DTC, etc. To avoid alienating their end consumers, rather than raising price, wineries can shift their channel allocation towards higher margin channels. Specifically, wineries can shift share away from retail and toward DTC.

I don’t mean to over-simplify things. A shift away from traditional retail distribution to DTC is not an easy undertaking. And it doesn’t come free. DTC requires new ways of thinking, different marketing, different partners, and of course a great fulfillment partner. WARNING…shameless plug…WineDirect clearly should be your fulfillment partner. To learn more about DTC, I strongly suggest the WISE Academy. With the right education and the right partners, a move towards DTC can be very rewarding.

Done right, a winery that shifts their channel allocation towards DTC can strengthen its ties to its consumers, enhance its brands, and increase its margins. A real win, win, win.

Jun 7, 2012 at 7:00 AM

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June 1, 2012 | Joe Waechter

Welcome Vin65 to the WineDirect Family!

This is truly an exciting day for us. As you probably know, a couple of years ago we made the announcement that we had licensed the Vin65 platform. For the past two years Vin65 has hosted the websites and wine clubs of all of our eCommerce customers. Today, I’m happy to share the news that we purchased Vin65.

With this exciting announcement, I thought I’d put together a quick blog post to share some thoughts on our motivations behind this deal and what the future holds for WineDirect and for our customers.

Our focus is on all things Direct-to-Consumer

Our goal at WineDirect is to be the “go to” company for anyone interested in selling wine directly to their customers. We can’t handle every aspect, of course. But what we can do is focus on making life easier for wineries and enabling them to scale their direct sales channels.

Covering the Basics

First things first, our job is to provide peace of mind for anyone partnering with us for telesales, shipping and logistics, or for eCommerce. What we do, we need to do well.

For our telesales team, that means handling the customer relationship with utmost care and finding new and creative ways to build customer loyalty.
For our logistics team, it means being attentive and responsive to the needs of our customers and living by our motto of delivering efficiency, convenience, accuracy and value.
And finally, for our eCommerce team, it means providing a platform that helps wineries sell more through digital channels (Internet, mobile, and social.)

In terms of eCommerce platforms for the wine industry, we happen to think that Vin65 is the cream of the crop. More importantly, I’m inspired by their vision. They’re hungry for knowledge and as a result, the platform keeps getting better and better.

What’s in store for the future?

In my view, success in the wine industry (and in particular the direct sales channel) hinges on our ability to adapt quickly to change. Change is happening at a record pace in the regulatory landscape, the world of technology, and in the way we communicate (i.e. social media) and that pace is not likely to slow anytime soon.

In terms of what’s in store, I see the following:

New features and better visibility: We’re bringing two very talented teams together, so stay tuned. The possibilities are numerous, but one of our primary goals is to provide unparalleled visibility into the direct sales channel.
Additional opportunities and new avenues for selling your wines: The importance of third party marketers is clear. They offer wineries a new avenue for customer acquisition and a level of transparency that has always been lacking in the traditional three tier system. Because of the October ’11 advisory that was issued by the ABC, we now have a clear roadmap for working with third parties. I look forward to more and more opportunities opening up over the next 12 to 24 months.

It’s been an exciting year for our industry and for our company. We’re looking forward to working with the Vin65 team and to building a great platform for direct sales together.

Jun 1, 2012 at 2:25 PM

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May 29, 2012 | WineDirect Admin

Now Is the Time to Get Your Customer Databases Ready for OND

It’s hard to believe that nearly half of 2012 has almost gone, and before we know it the busy holiday season will be upon us. This time of year is perfect for solidifying your relationship with your customers and making sure their shipping and billing information is up-to-date, which will hopefully make for a smoother and slightly less stressful OND for you and your staff.

So how do you go about strengthening your relationship with your customers now?

Party like its 1999!

Throw an exclusive, limited capacity event for your private customers. People want to be outdoors in a beautiful setting, celebrating the warmer weather, eating great food, and of course sampling your delicious wine! Invitation only release parties, lunches, dinners with live music are just a few ways that will strengthen the connection your customers have with your winery. Treat them like VIP’s and you will be rewarded with consistent wine purchases year after year.

What better way to make sure all your customer information is up-to-date than by having them pre-pay for their tickets using a simple, but comprehensive, event sign-up form?

Handy hint: Create a sense of urgency by showing a count-down of tickets remaining on your website, Twitter and Facebook.

Entice With a Prize

Send out a short and sweet email/tweet/post giving your customers the opportunity to be rewarded if they complete an easily accessible online contact information page. Let them know that you’d like to be able to expand your ability to dialogue with them in the future. You won’t get much traction without some sort of incentive in place, so make sure it’s enticing enough to motivate someone to enter their precious personal information.

For example: Go in the draw to win a trip for two to Napa worth $1500

The Personal Touch

The most powerful and immediate way to connect with your customers is to reach out over the phone to them. People love to hear from their favorite winery and will jump at the chance to talk about their experiences with you. It’s a great way to keep them interested in you, update their details and sell some wine!

It’s a far more active and effective than an email, Twitter or Facebook offer, and on average 70% of people who purchase will be repeat customers (Call for Wine statistics – 2004 – 2012).

If you are finding this task daunting (making phone calls is not everyone’s cup of tea) outsource to the professionals at Call for Wine. They’ve been in the business for eight years and are exceptionally good at capturing the personality of each winery and authentically representing each brand. They will call through your entire non-club and customer database, updating details as they go and building a good rapport with your private customers in readiness for OND.

Call to Action!

So why wait until the busiest time of the year to get organized? Start tidying your customer data now and be rewarded with the most profitable and effortless holiday season you’ve ever had!

May 29, 2012 at 7:00 AM

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May 24, 2012 | Genevieve Verdier

Knock Knock...Who Is There?

Your wine delivery!!

It is always a treat to receive wine delivered at your home but what happens when you are not there to sign for it? Carriers are required to obtain an adult (above the age of 21) signature upon delivery. If that requirement cannot be satisfied, they will return at a later date for another delivery attempt. Carriers are not allowed to leave a package containing alcohol at the door. After three delivery attempts, the wine will be returned to the sender.

Carriers will leave door tags to notify that a delivery was attempted, and some carriers will call the consumer if they have been provided with a phone number. Consumers can await the next delivery or arrange to pick up their shipment at the local carrier hub.

Unfortunately returned orders cost money. Not only is there a carrier charge for processing the return but there are additional transportation fees to send the shipment back. If the order is sent back to the WineDirect Fulfillment Center, it will be checked for any damage and restocked. So what can you do?

ALTERNATIVE ADDRESS: Ask your consumers if they have an alternative shipping address such as a work address at which there will likely be someone on hand during business hours to sign for the package.
MONITOR: WineDirect clients can monitor their FedEx and UPS delivery attempts 24/7 on our web Portal. Sign in and go to the Orders tab. On the left navigation menu, there is a link for “Delivery Exceptions” to pull up a report with carrier tracking links. You can then coordinate with your consumers for the next delivery attempt.
RE-ROUTE: WineDirect can arrange for order re-routing however there are costs involved for processing and potentially increased delivery charges depending on the new address.

It should be noted that for 3-Tier states, in which the order passes thru the in-state wholesaler and retailer licenses, state laws do not allow wine to be physically returned to the originating fulfillment center. Returns will be held at the state retailer for up to 6 weeks awaiting resolution (i.e. an alternative address is provided within the same state). Your Account Coordinator will email you with the return information and request resolution. If no resolution is provided within 6 weeks, the state retailer will dispose of the product.

Successful Deliveries = Happy Consumers.

Now if we can just figure out how to deliver more time in the day to enjoy all these wonderful wines!

May 24, 2012 at 7:00 AM

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May 17, 2012 | Joe Waechter

Getting to Know Your Customers

Stanley Marcus, who was an early President and later Chairman of the Board of luxury retailer Neiman Marcus, was once quoted as saying:

“Consumers are statistics, customers are people.”

For the wine industry, where the customer experience is vitally important, I think his words are especially meaningful. The customer experience reaches across dozens of different touch points: your product, your packaging, sales, marketing, wine club, retail tier, tasting room, and your staff (not just customer service but rather everyone involved, from your winemaker to your bookkeeper.) And don’t forget third party providers like WineDirect. We’ve been entrusted with your customer experience as well (to deliver your orders with care, provide information via email, to make sure the web experience exceeds their expectations, and to build upon your relationships through Call for Wine.)

Delivering an exceptional experience across all of these different touch points requires a deep understanding of your customers.

There are a lot of great tools and resources available today which allow us to see a broad picture of the typical wine “consumer”. Demographic information is used to understand the average age, gender, and household income of consumers. Transactional data like average order values and products purchased can be analyzed to understand aggregate consumer preferences and behavior. And all of this data can be invaluable, if used in the right way.

But it’s important to remember that customers don’t live in a data warehouse. This brings me back to Stanley Marcus’ quote: “Consumers are statistics. Customers are people.” I think the message in that quote is that in order to deliver a great experience, you need to understand the “people” behind the data, i.e. the individuals who interact with your brand and buy your wine. A solid understanding of the meaning behind the data provides one piece of the puzzle.

The other piece comes from getting to know your customers personally. What are their motivations, goals, and expectations? How do you begin to understand your customers? The easiest way that I know of is to go to them, through whatever channels you can. Talk to them on the phone, in the tasting room, at events, or through social media. After a while, you’ll begin to develop a better understanding of what their needs are and start filling in the rest of the puzzle. Some marketers develop personas as a means of gaining empathy for their customers - remember Constellation Wines’ Project Genome. Personas are a great way to focus and direct the conversation away from analytics and toward what is really important….the customer.

May 17, 2012 at 8:00 AM

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May 8, 2012 | Sheri Hebbeln

Engage Customers with a Great Winery Video Campaign

The use of video (both for ads and as content) is way up this year according to comScore. In March, 181 million U.S. Internet users watched nearly 37 billion online content videos, while video ads topped 8 billion for the first time on record.*

I think customers have become a little overwhelmed by the sheer volume of content on the web, and video provides a better way to connect through use of sight, sound and motion. But your campaigns should be well planned, because if done right, video can be a highly effective marketing tool.

What Makes a Great Video?

Research and Preparation: Before attempting your first video, it’s always a good idea to do some research. What types of winery videos are more popular with your target customer and which of those appeal to you?
Connection: Think about who your customers are and how you can use video to engage with them in a manner they will appreciate. Your video should be tailored to your audience.
Personality and Authenticity: A great video will give the audience a feel for who you are and what makes your winery special. It’s a perfect way to convey your value proposition.
Humor: People love humor, so if it fits, don’t be afraid to use it. I’m a big fan of the Gundlach Bundschu videos.
Length: Your video should be somewhere in the 2 to 5 minute range, no longer. To accomplish this, try to limit the video to a single message. You’ll want to put thought into the objectives of your video before production time.

How Should You Market Your Video?

Remember that success is not just about collecting views, butrather, it’s about generating interest and gaining customers.

Use video sharing sites: You’ll want to host your video on a site like YouTube and embed it on your own website or blog. And if you’re committed, consider starting a channel for your winery on YouTube and perhaps Vimeo.
Prepare your video for the search engines: When you upload your video to YouTube or another video sharing site, be sure to populate all informational fields including meta-tags and descriptions.
Share your video: Use all of the social media channels you actively participate in to really expand your reach: Facebook, Twitter, LinkedIn, Pinterest, and Google+ for example.
Engage with your audience: Respond to user comments on all channels and communicate with your followers through social media.
Measure your success: In order to measure you need to start with a set of clearly defined goals. Are you trying to educate your audience about your winemaking or green practices? Are you interested in generating brand awareness? Or is your goal to improve sales?

Depending on your goals, success can be measured by the number of views, by clicks to your website, or by specific user comments.

Sources for Video Creation

You can start with a Google search for video production companies in your area. A couple that I would recommend:

Resources

5 Things Every Video Marketer Should Know…Before Production Begins!
By G. Christie

Examples of Wineries That Have Done a Great Job with Video

*Source: Americans Watch Billions of Video Ads Monthly

May 8, 2012 at 11:00 AM

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April 9, 2012 | WineDirect Admin

Actively Grow Your Wine Club!

At Call for Wine we understand the importance of Direct-to-Consumer sales, and particularly Direct-to-Club sales. According to MKF Research approximately 24% of all your wine sales will come directly from your club. In fact, this can be the most consistently profitable part of your business. Therefore, it makes sense to nurture the club customers you already have, and make concerted efforts to increase your numbers.

How do you grow your club?

Approximately 85% of your club will come from the tasting room*. A great tasting room experience will lead to a strong, loyal club.

If you don’t have a tasting room, your next best option is to create a memorable wine related experience and sign people up at the event - wine dinners, wine tasting festivals and in-store wine tastings are a great way to gather followers. Collect as much data as you can at these events. Electronic tablets are a great way for people to enter their details. Make sure that there is an incentive for them to sign up with you on the spot. Don’t forget to build your mailing list as well!

Send out invitations to your mailing list once or twice a year. Motivate people to join with a generous, exclusive sign-up offer.

You’ll also want to make sure your online experience is attractive and easy to navigate. The club sign-up process should be enticing and straightforward.

And now….

A new club builder tool!

At Call for Wine we are excited to offer a brand new club builder and retention program. We’ve been successfully helping wineries to gather loyal supporters with carefully crafted relationship marketing telephone campaigns. And what’s more, we’ve managed to make these customers the wineries most loyal brand ambassadors year after year.

Get active, build your business.

Club customers are a vital part of a winery’s business. If you can effectively create a fan base and keep their adoration your winery can be a rock star of the wine world!

*DTC Wine Symposium 2012 – ‘Winery Check-up’

Apr 9, 2012 at 7:00 AM

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March 22, 2012 | Sheri Hebbeln

A Brilliant Alternative to the Gift Card

The gift card industry has been growing tremendously over the past decade or so. According to research firm the Tower Group, it should reach $100 billion this year. But there are problems with gift cards: they’re impersonal and they’re not exactly convenient. You have to go to the store to buy one, figure out the correct mailing address, and then run to the post office to send it. Another big problem with gift cards is that we tend to forget about them for weeks or months before finally redeeming them, or worse yet they get tucked away in a drawer, never to be seen again.

With the digital age, it was only a matter of time before someone came up with a really good alternative. One that I really like is Karma Science. Lee Linden and Jen You from the Karma team came into our offices a while back to show us their new app and to talk about offering wine through their unique new service. Since that time, I’ve had an opportunity to download and explore Karma.

Karma is a “mobile social commerce app”, or to put it another way, it’s a really fun way to send someone a gift from your phone. The idea in creating Karma was to come up with an easy way to let you “capture the moment in the moment.” No more worrying about your gift card not being redeemed for months.

Here’s what I like about Karma:

It’s Different
Buying a gift online has become pretty predictable. Gifts are almost always arranged into standard categories like “by occasion” or “by price”. Karma adds more meaning by using verbs like thank, celebrate, surprise, inspire, indulge, pamper, congratulate, entertain, delight, or impress to help you find the perfect gift.

It Offers a Nice Selection
They’ve carefully cultivated the product selection and are working with some great partners like Barnes and Noble, Spotify, Gund, Chandon, Jonathan Adler, MOMA, Kate Spade, and Vosges Haut-Chocolat. This tells me that when I’m in a pinch, I know they’ll have gifts to suit the occasion.

It’s Social
This is where it gets interesting……brilliant actually. When you login to Karma, you can choose to login via Facebook, which means that they are able to tap into a treasure trove of data and deliver up gift suggestions based on that data. Better yet, they go beyond the standard profile information (like dates for birthdays and anniversaries) and conduct a semantic analysis of your newsfeed to pick up keywords like “congratulations.” They then offer suggestions based on what they find. And, to make it even more viral, your recipient can easily post on Facebook “I just received this gorgeous Napa Valley Cab from Jake.”

It’s Easy
To send a gift, you pick from either your address book or from Facebook. Karma then sends your gift recipient a message via text. The real beauty in this is that people tend to read text messages right away, whereas with the mountains of email we all receive each day, messages can easily get lost. Your recipient then fills in shipping information so that you don’t have to fumble through your address book to find it.

It’s Personal
The gift giver can really have fun with some of the personalization features – creating a special and unique gift message using photos, voice or video.

Special Delivery
Imagine receiving a text message that says “Charlie has sent you a gift”. As the gift recipient, you get to actually “unwrap” your gift on your phone or desktop. You also have the opportunity to either exchange your gift for another same-priced item or donate the value of the gift to charity if it’s not just right. And don’t worry; the giver doesn’t need to know.

Personality
I love the Karma personality. The app design is clean, yet a little playful and the gift packaging is young and fresh.

If you are interested in learning more about Karma, you can visit their website to download the app (currently available for iPhone and Android phones).

And if you’re a WineDirect fulfillment customer and would like to learn about participating in Karma, please feel free to contact me or your Account Manager.

Mar 22, 2012 at 7:00 AM

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March 15, 2012 | Genevieve Verdier

Aliens Abducted My Wine!

Sometimes that is what it feels like in that time between placing the order online and receiving the wine at your door.

The average weight for one 750ml bottle is 3 pounds. Shipping twelve bottles totals to around 41 pounds including packaging…which is equal to a small child! Unfortunately shipping heavy items can be pricey. Small children are pricey but that is another topic. For the savvy winery, there are ways to minimize shipping costs. Unless there is a pressing need such as a birthday party tomorrow night that you absolutely positively have to have that specific cabernet, the most economical shipping method is Ground.

12 750ml bottles = 41 pounds!

Yes, Ground does take longer than 2Day or Overnight but with a quick check on weather conditions in the destination state, Ground shipping can maintain the integrity of your wine at a lower cost. The WineDirect Fulfillment Portal offers a nifty weather hold management tool. You can place a state on hold for a specific period of time with just a couple clicks. If hurricanes are causing havoc in the south east, put those states on weather hold. If the New York has declared a snow day, you can easily hold your orders. The Portal also offers a quick link on the landing page to see the temperatures across the country to help with your shipping decisions.

Web Portal Temperature Map

Your Account Manager is available to walk you thru placing a state on hold on the Portal. We have not figured out how to control the weather but we do have ways to control costs. It should be noted, and our legal counsel will be pleased with this, neither WineDirect nor the carriers can insure against alien wine abduction. We will have to take our chances that the aliens prefer beer.

Mar 15, 2012 at 7:00 AM

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