Just how much wine is sold online?
Just how much wine is being sold through the Internet? A recent article in the San Francisco Business Times about Wine.com's recent deal with Amazon had this tidbit:
Just how much wine is being sold on the Internet?
Last year (2004) the U.S. retail wine market (both online and off) was a $23 billion a year business (the article says $22b, I have heard as high as $60b, but for this purpose I will go with a Wine Institute estimate). The vast majority of those sales were done at low price points - $14 and under per bottle - 65%. The remaing 35% ($14 and up) is considered the ultra premium market.
Most of the under $14 segment is everyday drinking wine and is sold at supermarket and discount stores (Target, Safeway). The over $14 is the segment with the best chance of being sold over the Internet.
There are two significant impediments to selling wine on the Internet:
Only in the higher segments is it worth it for a buyer to pay to have a wine shipped. That leaves us with only $8 billion in potential online sales.
In our research behind WineZap, we learned that of the 2500 wine retailers in the U.S., around 500 of them have websites. Of those 500, at least 250 have e-commerce enabled websites.
There are several big players such as Sam's of Chicago, Pop's, Zachy's and K & L Wines that sell over $100 million in wine a year. Each of them has a significant online presence. Even if each of those three only did 5% of sales online each year - that is $15 million.
At the second tier, there are a score of retailers doing $20-50 million a year with a significant web presence (Premier Cru, Wine Club, Wine Library). Each of these is doing a significant online business.
Finally, the remaining local retailers with e-commerce enabled sites do a significant volume in aggregate.
More wine is sold through the Internet than just in a shopping cart. Wine shops have always relied on newsletters and communication to customers to sell wine. Savvy retailers have put their regular newsletters online and in email to help move wine.
No good figure exists on how much wine is being sold online. But when I look at the issue, my guess would be closer to $500 million.
Currently, less than one percent of wine sales occur online, probably totaling less than $60 million in sales last year, Garrick told the San Francisco Business Times...The article goes on to say that Wine.com did $32 million in sales last year, or more than 50% of all online wine sales. As CEO of Wine.com, George Garrick is trying to build a consumer friendly online only wine shop, but I think he has understated the size of the online market. Even if the $60 million figure is correct, this is an interesting issue:
Just how much wine is being sold on the Internet?
Last year (2004) the U.S. retail wine market (both online and off) was a $23 billion a year business (the article says $22b, I have heard as high as $60b, but for this purpose I will go with a Wine Institute estimate). The vast majority of those sales were done at low price points - $14 and under per bottle - 65%. The remaing 35% ($14 and up) is considered the ultra premium market.
Most of the under $14 segment is everyday drinking wine and is sold at supermarket and discount stores (Target, Safeway). The over $14 is the segment with the best chance of being sold over the Internet.
There are two significant impediments to selling wine on the Internet:
- A patchwork of state regulations that makes legal shipping difficult to impossible
- The physical weight and relative fragility of wine bottles that makes them expensive to ship
Only in the higher segments is it worth it for a buyer to pay to have a wine shipped. That leaves us with only $8 billion in potential online sales.
In our research behind WineZap, we learned that of the 2500 wine retailers in the U.S., around 500 of them have websites. Of those 500, at least 250 have e-commerce enabled websites.
There are several big players such as Sam's of Chicago, Pop's, Zachy's and K & L Wines that sell over $100 million in wine a year. Each of them has a significant online presence. Even if each of those three only did 5% of sales online each year - that is $15 million.
At the second tier, there are a score of retailers doing $20-50 million a year with a significant web presence (Premier Cru, Wine Club, Wine Library). Each of these is doing a significant online business.
Finally, the remaining local retailers with e-commerce enabled sites do a significant volume in aggregate.
More wine is sold through the Internet than just in a shopping cart. Wine shops have always relied on newsletters and communication to customers to sell wine. Savvy retailers have put their regular newsletters online and in email to help move wine.
No good figure exists on how much wine is being sold online. But when I look at the issue, my guess would be closer to $500 million.
posted by Michael Stajer at 2:36 PM
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