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July 07, 2006

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Tim

I agree that wine w00t is an interesting concept, but there are three problems with their model from a winery's viewpoint. Problem one is the shipping fee which is artificially low at $5. Sending 3 or 4 bottles to most any state will cost the winery more than that so this eats into the "profits" of w00t; if most of the orders are from the east coast, forget any profit. The second problem is the wine pricing at 40-60% less than retail. Since this is direct to consumer, this is not such a huge issue, but when you combine this with the shipping exposure, most wineries will be underwater. The last problem is probably the biggest one in my book, that's the customers you will in effect sample your wines to. Will these same customers pay retail for these or join your wine club? Probably not after getting this deal at w00t; they will just wait for the next fire-sale each Monday morning. That's not to say that this doesn't have it's place, however. If you have excess inventory and want some quick cash, by all means pursue this channel.

The RadCru deal looks to be more interesting as they are not targeting low pricing. The barrier there is being an Intertia customer, but this seems like a good move for a small winery and RadCru is just another "feature" of the offering.

Mike Duffy

Hi, Tim.

Glad to seem someone else has the same problem I have with spelling "Inertia" (intertia). [grin]

It would be interesting to see your analysis of wines offered on Woot! For example, does MacRostie need cash, or are the wines poorly received, or ...?

I think this is a way to see what happens when you put your wines in front of a new crowd. The goal, of course, is to convert someone who gets your wine via Woot or RadCru into a fan on your wine. Just putting them up on these sites doesn't guarantee them. In that respect, RadCru may be better if you capture information via Inertia's engine.

I appreciate your analysis, but I hope it doesn't keep people from running the experiment for themselves and learning from the result (and maybe posting their actual experiences for all of us to learn from).

So much of wine marketing seems to be "what everyone else is doing." Witness the popularity of home page pictures of vineyards or a building. Not much experimentation, not much difference. I think you have to try new stuff and see what works for your winery.

Tim

The current deal at w00t is four 2003 MacRostie Paso Robles Syrah. This wine retails for around $25 a bottle, so the winery should expect $100; the wine w00t price is $39.99, a 60% discount. If the winery sold this via distribution, they would receive $50 for the four bottles, but most likely not as quickly as from w00t, so there is some time-value-of-money aspect to this calculation. At any rate, the w00t price is less than FOB and I haven't taken the w00t transaction fee out yet. Now let's look at the shipping. For argument's sake, let's say that w00t gives the winery the entire $5 they charge the customer. Shipping 4 bottles, including the box and labor to pack, etc. will cost the winery a minimum of $10-12 if shipping inside California; this would be closer to $18 if shipping to me here in Minneapolis and about $20 in some other eastern states. This means that the exposure on each transaction for shipping is a minimum of $5 to as much as $15. Given the w00t transaction fee needs to be paid and there is a cost to production here, I can't imagine MacRostie is making any money on this deal and is most likely losing money here.

So let's say that they are foreword thinking and have sold this as a marketing cost (that's how I would look at it). OK, so you have several hundred new customer who have paid $11.25 for your $25 bottle of wine. Let's say they really like the wine (BTW, I'm sure it is great from the notes I've seen online) then will they buy more when they see it in the store on sale at, say $20 a bottle? That's where I'm not convinced that you would see a lot of pull-through business, but I could be wrong. So as I said the first time, wine w00t is great for moving excess inventory for the winery. For the consumer, it is a hot, smokin' deal (heck, I'm going to get in on this deal :)

Paul Mabray

Thanks for looking at this - I agree with the last comment from Tim - woot.com has always been a "deal" warehouse and they do a great job. I am pleased they extended it to wine.

We chose radcru for two key reasons:

1. They focused on unique wines to share to the audience instead of deep discounting.
2. They give the customer to the winery (not shielding) thus brokering NEW customers for the winery to continue to market and strengthen that relation.

Those two reasons make RadCru rock!

Inertia - Powering the Wine Revolution

---Paul Mabray - CEO


Mike Duffy

Thanks for the comment, Paul.

I think there's room for more than one approach, and it's great to see. I'm looking forward to following these two sites.

I'd love to get comments from Jeff at RadCru and [whoever] at wine.woot! about the way they're approaching the wine industry with their programs.

Paul Mabray

Actually I hope there is room for 1000's of these types of programs to help expose the consumers to wine and purchasing it online. I'll ping RadCru to have them comment.

Inertia - Powering the Wine Revolution

---Paul Mabray - CEO

Matt Rutledge

Hello Mike. Thanks for the generous coverage and sparking this intelligent dialog. Some nice angles have already been pointed out by Tim, Paul and yourself on varied approaches to the industry. I'm satisfied with the current perceived and real differences. Bottom line, wineries should not ignore new venues to expand their brand recognition and move product. Once critical mass is reached, distribution methods and market share could shift quite quickly.

---

On our end, wineries should simply email [email protected] for more information. At this point during our beta program, expect some delay in both communication and (if an event is mutually beneficial,) scheduling. We're 6-8 weeks out as of today.

also (sorry if I'm abusing the comments here - mod this out if necessary) if anyone in general is part of a wine related event or web page you would like wine.woot to consider sponsoring, please email [email protected] with a quick summary.

thanks again

Matt Rutledge
CEO, Woot Inc.

Jeff Playter

Hi Folks,

Thanks for the great discussion. RadCru is focused on presenting our winery partners and their often hard to find wines as the story. Being close to Napa, only 30 minutes away, we have access to some of the finest small wineries in the world. We have been meeting with them daily for months. By working closely with Inertia and our winery partners we can make sure that all interests are protected and we go to market with a consistent message. The wines we offer have been signed off on by the wineries themselves. Woot is a great concept that has been successful and there is room for many more similar companies. It's way early in this game and we look forward to both companies being successful.

Cheers,

Jeff Playter
Co-Founder
RadCru.com
jeff -at- Radcru.com

Small Vines. Rad Wines.

Mike Duffy

The marketing speak started to get a bit deep in here! I think the important question for both RadCru and wine.woot! is whether or not the winery gets information about the buyers. Unless someone simply is trying to move excess inventory, there has to be some longer-term advantage to the winery, ideally one which allows them to stay in touch with these new customers.

I hope wineries who investigate these offerings will share their experiences, either here, or on their own blogs.

Jeff Playter

Hi Mike,

Great point. As Paul stated we share our info with the wineries so they are completely in touch with the customer.

Cheers,

Jeff Playter
Co-Founder
RadCru.com
jeff -at- Radcru.com

Small Vines. Rad Wines.

Lesley Russell

St. Supery had a positive experience selling our wines on wine.woot.com. Woot shared the customer contact information with us, so I consider the main benefits of the sale to be the new customers we have and the brand exposure.

Jeff Playter

Hi Lesley - If you're looking for the below type of customer, you've found them on Woot. I'm not sure most wineries are willing to go in this direction just to move some wine.

"jmjoseph

Joined on 02-23-2006
Posts 20

A month or so back I purchased a remote control lamborghini mercielago from woot.com.

To be honest I had way too much Boones Farm that night and was drunk off my gord.

Maybe with this fancy woot wine I will be able to resist the urge to live out my "childhood"/"incredibly small person dreams" of driving a TOY CAR....

Only time and 4 bottles of wine.woot.com will tell........ "

4 bottles of St. Supery wine.

Margo

So Jeff- if I am following the above posted comment about Boones Farm/lamborghini...is it safe to assume wine.woot's clientelle /market consists consumers who are less appreciative of fine fines- and perhaps don't really belong in Radcru's market if they are looking for a cheap buzz?

mike

Woot is infamous for poor shipping and non-existant customer service. Prepare yourself for a long wait for product. With no order status.

And look out for the forums. Dare complain and you'll be flamed by rabid, cult-like, Wooters. Just search the forums for shipping delays and you'll see exactly what I mean.

Bottom Line: That good deal may not seem so good after you've suffered the post order indignities. Go elsewhere.

Mike Duffy

Clearly, "mike" wasn't happy with woot!.

But I'd *rather* hear actual, specific instances related to WINE.woot!, either positive or negative, rather than extrapolation. Thanks, all.

The proprietor (Mike Duffy)

Loweeel

Very late followup, but somebody linked to it on the wine.Woot forums.

The shipping with wine.woot has been almost universally exceptional. Most packages are shipped and delivered (to DC or VA) within 5-16 days. Never had a bottle broken or damaged during shipping. I did order some pinot noirs that were skunky and very earthy (one being even slightly fizzy!) instead of fruit-forward, and woot contacted the winery and had them send me replacement bottles, no questions asked other than my say-so.

It's a relatively inexpensive way to get into wine, and I love it.

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