(Note that this article originally appeared in July of 2017, but has been updated in light of recent events.)
One way that wineries encourage eCommerce sales is by offering deals on shipping. Indeed, the average consumer is becoming accustomed to free and reduced-rate shipping deals when shopping online. But you have to be cautious when structuring these wine-shipping deals.
Why Take a Closer Look at Shipping Deals for DTC Wine?
Shoppers hate to find a product they like and then find out that they have to pay shipping on top of it. On the other hand, roughly 88% of consumers say they would be more likely to shop at a site online if they were promised free shipping.
This past holiday season, Amazon, Target, Walmart, and other retailers offered free shipping on tons of products, hoping it would yield additional sales and boost market share… enough to cover shipping even with increased transportation costs.
But, with increased spending across the board, demand for shipping services has grown much faster than carriers can hire on the needed labor—meaning that more price increases might be in store for the future.
So should wineries be doing the same for their DTC sales? Will a shipping deal be enough of a boon to eCommerce that the seller can absorb higher and higher shipping costs?
More importantly, are such incentives a solid part of a long-term business strategy, or are they more a short-term band-aid that only serves to squeeze margins thinner?
An Extension of “The Amazon Effect”
As Laura Larson, founder of Virtual Vines DTC Consulting Services, put it once: “We’ve all become Amazoned.”
Amazon has been experimenting with beer, wine, and liquor delivery since about 2015. But after it shuttered it’s own Amazon Wine service and acquired Whole Foods, it found a new way to provide delivery services for it’s Amazon Prime customers. Several metropolitan areas such as Houston and Miami now offer 2-hour delivery of beer and wine to Prime customers.
In other words, many customers can order beer and wine online and get it quickly, which will put pressure on smaller wineries trying to build their eCommerce presence. It will also create greater consumer expectations when it comes to delivery speed.
Shipping Deals for Wine Clubs and eCommerce
Can wineries hope to compete by offering better shipping deals, especially for their eCommerce customers? The shorter answer is that there is no easy answer. There is no single strategy that will work for every winery or wine business. A lot depends on:
- The states you have licenses to ship to,
- Whether you are seen as a premium brand, a value brand, or something else entirely,
- Current shipping rates,
- Loyalty to your own brand, etc.
Still, we’ve found that there are some solid “best practices” to consider if you do decide to offer a shipping deal for your wine:
- Know the laws regarding shipping. Find these out before you even begin, so you know what constraints there are. For example, the California ABC states that No free goods or premiums may be provided in connection with the marketing and sale of alcoholic beverages. This includes free shipping. Shipping may be included in the price but it cannot be offered as “free shipping.”
- Measure the effects. If you sell online, look at your numbers for cart abandonment. Try to figure out if consumers really are abandoning the sale at the point where shipping rates are revealed. If so, discounted shipping may be the cure. If not, look elsewhere for the problem. Else, you might be cutting into profits with little to show for it in terms of increased order completions.
- Be cautious about devaluing your product. Discounted shipping can keep you relevant in the marketplace, but be wary of the impression you are creating. Also pay attention to the pace of discounts: Are frequent discounts making you look like a value brand when you are not a value brand?
- Pay attention to context. Where is the offer being made? Digitally, through emails exclusively, or in the tasting room? Consumers may be accustomed to receiving shipping offers via email, for example, but find the discussion awkward in person.
- Make them “work for it.” Many retailers offer free shipping when customers spend a certain amount ($50, for example). Then, instead of balking at shipping rates, the customer receives an incentive to spend more. The free shipping is partly paid for by the increase in average order size.
- Include shipping as part of a “membership.” Amazon figured this out with their Prime membership. If you have a wine club, charge an up-front members’ fee to help offset shipping costs, then make each order free or “shipping included.”
- Try “promotional period” shipping deals. These are shipping offers that are good for only a limited time, perhaps even a single purchase. For example, you could offer a seasonal deal, a “first-time buyer” deal, or a loyalty or wine club bonus.
- Look for efficiencies. Would it be easier to ship kits or bundled items instead of solo products? What is the ideal purchase size where a shipping discount makes sense? Can you encourage larger purchases with flat-rate shipping? Sometimes the question to answer is not if to use a strategy, but when.
In short, the question should not be whether free shipping or shipping discounts are “worth it.” The real questions are what matters to consumers, how do you want your brand to appear, and how can your establishment offer creative shipping deals that do justice to both?
You can also discuss your particular pricing and fulfillment challenges with one of our experts by contacting us. We’re at your service!