There’s no doubt that DTC wine sales are up, as we’ve said before. This has been further substantiated by the 2018 Direct to Consumer Wine Shipping Report by Sovos and Wines & Vines. But, as more and more wineries, importers, and retailers enter this space, it’s worth asking: Where is the real growth potential here?
To give away the punchline: That growth will come with digital maturity, or so we argue. Even as DTC sales are growing, there’s evidence that the wine industry is lagging behind other industries when it comes to using digital tools.
That’s not a bad thing. It means that there are some simple ways to get an edge over the competition, if wine sellers and wine clubs take the time to learn the tools and tricks to do so.
Is Wine Really Behind the Times?
To compare and contrast with the DTC report by Sovos/ Wines & Vines, we read with interest the 2018 Silicon Valley Bank (SVB) Wine Report, which came out a little afterward. This caught our attention:
“Today, e-commerce represents about 10 percent of total US retail sales…While wineries have gravitated to DTC sales, it is old-school sales without current e-commerce tools. With only 3 percent of today’s winery sales true online purchases, how can we say that wineries are really focused on DTC sales?”
Of course, sales in tasting rooms count as DTC just as much as online sales, so it is helpful to distinguish the two. But the takeaway here is surprising: When one makes that separation, eCommerce sales of wine hover at 3%, whereas the retail average is 10%. So wine is lagging behind.
A few other choice observations (feel free to skip down if you’ve read the report already):
- “Few wineries have an online presence that engages the customer. Sites lack sophisticated, responsive, fully integrated designs and experiences that allow new and returning customers frictionless e-commerce.”
- “Winery websites are almost static, and, with the exception of basic Google tracking, they don’t harvest visitor information or put it to use for responsive experiences, retargeting and modern FOMO (fear of missing out) tools.”
- “Online product marketing is rudimentary, lacking a push to consumers who might index high on Google search results. There is virtually no focus on turning Instagram followers into micro-evangelists or deploying targeted Facebook ads.”
- “There is virtually no investment currently for online acquisition and retention of potential wine customers and no management of the larger universe of prospects.”
- “The use of big data to enhance outreach to consumers and improve sales opportunities is not employed at all.”
And finally, the killing blow:
“The opportunity is wide open for a company using online tools to replace the distributor’s sales and marketing role.”
Getting That Edge
We can use these bits from the SVB report as a template—or at least, the start of a template—for strategizing about the digital tools needed to grow and expand DTC wine sales.
- Sophisticated, responsive websites. Your website should look appealing and be easy to navigate—even when (especially when) viewed on mobile devices.
- Modern eCommerce tools that are frictionless. There are several to choose from, and many integrate easily with your inventory software, customer databases, and marketing tools. (Are you sending an automated message to folks who leave a shopping cart abandoned? Why not?)
- Online marketing (and segmentation). Are you displaying ads to those searching for your products? Building a fan base on social media? Not only do these draw consumers to your eCommerce store, they provide a robust amount of information on who is buying your wine. This then allows you to segment your market and tap into those segments with highly relevant messages.
- User analytics. Beyond segments, you can get data at the user level. What do your purchasers like? What do they like to do? Which ones drink which kinds of wine? Who is most likely to recommend your wine to friends? Believe it or not, modern tools can answer all of these questions, and more.
- Retargeting and FOMO (“fear of missing out”) tools. If someone visits your website, are you showing them additional ads on social media? You can, and you can even display specific ads or offers based on the specific web pages visited. So, if someone looked at red varietals, your ad can speak to that. Add in tools that display how popular your brand is becoming, and users will want to be part of the experience.
- Retention of wine customers. Customers will buy from you again if they like your product and feel engaged with your brand. Tell them your story, personalize your offers, and give them a little “thank you” every once in a while—especially if they have been loyal wine club subscribers.
- Using “Big Data.” Yes, it’s been the buzzword these past few years. But with good reason: Every action online is creating huge amounts of data, and there’s insight hidden in that data. Most of the tools above work with big data in some way. So don’t let the label scare you—embrace it.
So Why Didn’t the Report Find The Industry Using These Tools?
OK, so we don’t want to speculate on what goes through people’s minds when they hear about digital tools. Psychology is just as thorny as logistics.
But we feel it is safe to point out two contributions, and why they might be changing:
- Getting burned by past technologies. Remember QR codes? Flash-heavy websites? Stuffing keywords into your web page for SEO? Folks who invested heavily in these probably never saw a return on their investment. Get burned once, and it’s understandable why you might be gun-shy. That said, it’s clear that there are some sea-changes to our shopping habits that are here to stay: Online shopping, social media, etc.
- A winery’s expertise is in wine, not digital technology. Of course, that’s how it should be. But unless you have a good partnership with an outside vendor, it’s hard to stay up on the latest tools and how to use them. That stated, more and more tools are hitting the market, and many of them are designed specifically for the wine industry. It may well be time to turn to a trusted partner and ask: “What’s next?”
In short, we shouldn’t let fear and ignorance drive important business decisions. The SVB report was a sort of wake-up call: As a whole, the wine industry could be doing better. But that just means there is still a lot of opportunity to try new things and really grow a new channel. Maybe 2018 is your year.
If you have questions, want to speak further about solving your Direct-to-Consumer Shipping issues, or how to support your digital presence in 2018 by providing an elite customer fulfillment/delivery experience, give me a call or come on in for a cup of coffee!