The Winery Web Site Report

New Vine Logistics Suspends Operations

UPDATE 2009-06-01: Wine Business News has confirmed the suspension.  You can follow the realtime reaction on Twitter.

Someone gave left an anonymous comment to on one of my recent posts which alleged that the bank had padlocked the warehouse at New Vine Logistics (NVL) on Friday morning, May 29th.

I tried to contact NVL on Friday at about 4:30 PM Pacific to confirm the rumor.  I did reach David Yewell, one of their two sales managers, who didn't have any information, having been out of the office on sales calls all day.  I tweeted looking for another contact to confirm the rumor, without luck.

LarryTheWineGuy tweeted this morning (Sunday, May 31st) that NVL has suspended operations.

If this is true, there will be lots of repercussions.  They are believed to be Amazon's partner for shipping and compliance, and have wine in inventory from a whole slew of wineries.

What Ever Happened to Amazon Wine?

After a big flurry of activity last year, with a projected Fall launch, Amazon.com's wine program went strangely and completely silent (at least in the news -- I have confirmation from at least two sources that they are active behind the scenes).

Any one have information that they're willing or able to share?  Leave an (anonymous) comment!

(take a look at the Amazon category to see everything I've posted on this topic)

Amazon Wine: Contact Information from New Vine Logistics

Here is the full text of a press release from New Vine Logistics:

Amazon Selects New Vine as its Compliance and 
Fulfillment Partner for the New Online Wine Initiative
Get Your Wine in Front of 60-Million Amazon Consumers 
Streamlined Set Up for New Vine Customers 
  
In the partnership, Amazon will provide front-end marketing services for wineries to list, promote and sell their brands, and New Vine will store, pack, and ship orders placed through Amazon's new online wine initiative. Like many of our customers, Amazon values New Vine because of its ability to provide an all-inclusive solution that will ensure the highest quality of fulfillment and compliant shipments.
As a New Vine client with existing inventory and compliance arrangements, participation in the Amazon wine initiative will be streamlined. With minimal effort and commitment, you can add exposure to the millions of loyal Amazon consumers.
Account Managers from Amazon are contacting wineries now to present the opportunity to list their unique wines on the new online site.
If you would like more information on how to take advantage of the Amazon opportunity, please send inquiries to feedback@newvinelogistics.com or to Nate Glissmeyer (Amazon Services - Category Manager, Wine) at Nate@amazon.com. 

I imagine Nate Glissmeyer is a pretty popular guy these days!

Additional coverage of the Amazon wine program and New Vine Logistics is available here.

Where Will Amazon Ship Wine?

Inquiring reader Jack d'Agostino asks: Where will Amazon be shipping wine?

New Vine Logistics, who will apparently be doing fulfillment for Amazon, claims that they can deliver wine in 45 states.  Press reports have stated that Amazon will ship wine to 25 or 26 states.  There are currently 15 states where direct shipment of wine is prohibited (Alabama, Arkansas, Delaware, Kentucky, Maine, Maryland, Massachusetts, Mississippi, Montana, New Jersey, Oklahoma, Pennsylvania, South Dakota, Tennessee, and Utah), plus one state (Kansas) where you must purchase the wine on-site.  The Wine Institute has more details on each state's shipping laws.

My best guess is that Amazon will be shipping to the 26 states whose state laws were unaffected by the Supreme Court decision in Granholm vs. Heald, namely:

1. Alaska
2. California
3. Colorado
4. Georgia
5. Hawaii
6. Idaho
7. Illinois
8. Iowa
9. Louisiana
10. Minnesota
11. Missouri
12. Nebraska
13. Nevada
14. New Hampshire
15. New Mexico
16. North Carolina
17. North Dakota
18. Oregon
19. Rhode Island
20. South Carolina
21. Texas
22. Virginia
23. Washington
24. West Virginia
25. Wisconsin
26. Wyoming

This represents the last-likely-to-cause-problems approach, which makes good sense.

Of course, since Amazon has made no official announcement, and New Vine Logistics refers all questions to Amazon, this is (educated) speculation.  It will be interesting to see where they roll out initially, and what happens over time as a result of Amazon's entry into the marketplace.

(Astute readers will notice that eight states -- Arizona, Connecticut, Florida, Indiana, Michigan, New York, Ohio, and Vermont -- are not part of the 15 + 1 + 26.)

Winners and Losers in an Amazon World

Steve Bachmann of Vinfolio has an excellent summary of what we currently know of the Amazon.com wine program, and its effects on the industry.

As I've said before, everyone who sells wine online is going to have to step up their game to compete with Amazon's deep experience as an online wine retailer.  For some wineries, it will be easier to just let Amazon do it, rather than to upgrade and maintain a substandard e-commerce architecture.

Amazon.com and Napa Valley Vintners

According to Reuters (and confirmed by Steve Heimoff), Napa Valley Vinters (NVV) is now holding introductory meetings for Napa-based wineries to meet with Amazon.com regarding the requirements for selling their wines through Amazon.  In other areas, Amazon is meeting directly with wineries, but the large number of Napa-based wineries seems to be the motivation for group meetings (also as a way for NVV members to get value from their membership fees).

Note that this coverage is based on a press release from NVV, not an official annoucement by Amazon.

Napa Valley Vintners  describes themselves as follows:

Now in our seventh decade, the Napa Valley Vintners (NVV) non-profit trade association is the sole organization responsible for promoting and protecting the Napa Valley Appellation as a winegrowing region second to none in the world. Respect for our history reinforces our commitment to the preservation and enhancement of the Valley's land, wine, and community for future generations. We address the shared interests of more than 310 member wineries and aspire to be the essential organization for all Napa Valley vintners.

Previous posts about Amazon.com moving into online wine sales:

• Amazon (Quietly) Sells Wine
• Details on Amazon's Upcoming Wine Program
• More Musings on Amazon.com Wine Sales
• Jeff Stai on Amazon.com's Wine Program

This is the first report that states Amazon will be using New Vine Logistics (NVL) for fulfillment.

According to Jeff Stai of Twisted Oak (who has met with Amazon), wineries will set the price at which their wines will be sold, and Amazon will pay them 50% of the selling price.

Do readers know of any other winery associations being approached by Amazon?

UPDATE: Winecast also notes the Reuters report and links to The Wall Street Journal coverage.

UPDATE: New Vine Logistics aquired their initial fulfillment infrastructure from the failure of WineShopper.com, which had previously received a $30 million investment from Amazon.com.  In other words, wine has been on Amazon's mind for a long time, and there is a previous relationship between Amazon and NVL.

Jeff Stai On Amazon.com's Wine Program

Jeff Stai (El Jefe) of Twisted Oak met with Amazon representatives last Thursday, and here is his report (left as a comment on a previous Amazon-related post):

OK, so I am reporting back Sunday (just back from a very successful two-day tasting event with the TAPAS organization.)

Pretty much everything has been covered by other comments in the several posts on this. They are going for smaller wineries, and the wines will sell for a minimum of $12. The winery commits to selling the wine, Amazon comes and picks up the wine and deals with everything else - including compliance paperwork, shipping problems, etc.

Fans of the Amazon Prime program will be pleased to know that Prime will also apply to wine shipping - and only a two-bottle minumum order! [Yippee! - Editor]

It won't be 45 states but rather 27 states in the initial rollout. One possible barrier to entry for some wineries is that the winery must pay all regulatory fees for label registration in those 27 states (Amazon estimates that to be about $400 per label.) That is a startup cost and the yearly renewals will be less. Amazon does the paperwork. Note also that if a winery is already registered in a state, another registration must be done since it is a new 3-tier path. And, a winery must commit to all states that Amazon will ship to - you can't pick and choose states.

Thanks, Jeff.  You're the best.  One question:  How do wineries who want to participate in this program get in touch with Amazon?  Or is it "Don't call us, we'll call you?"

More Musings On Amazon.com Wine Sales

A few days back, I posted about Amazon's entry into both delivery and online sales of wine.  "Agent Red" of The Wine Spies left this comment on one of the posts:

Are wine retailers worried about Amazon's foray into wine? Personally, I am not, but I would love to hear the opinions of others. From my point of view, our value proposition is so vastly different from that of Amazon that I do not view them as competition at all.

Although my original post focused on the impact of Amazon on wineries, it will be interesting to see how retailers (online and offline) are affected as well.  Since all 2006 Acme Winery Chardonnay is the same thing (allowing for storage and transportation issues), will people still buy from the winery or a retailer if they can get it cheaper on Amazon?  Obviously, wines not available at Amazon will be a different matter. 

In the Amazon program (as currently understood), wineries set their price and Amazon pays them 50% of that amount per sale.  So, the winery has control of the price that Amazon charges.  Will wineries discount in order to get volume via Amazon?

For retailers, it will be an issue of service and convenience.  Shoppers have shown that they will cheerfully migrate to online ordering when retailers don't provide value (in terms of service, convenience, or experience) for the price they charge.  Their one clear advantage is being able to taste wines at retail.

It appears that Amazon is willing to take relatively small quantities of wine (at least at the outset), allowing smaller producers to participate.  For savvy consumers, Amazon will have to demonstrate that they take good care of the wines.

Regardless, since Amazon e-commerce is so familiar and easy, wineries and retailers will have to step up their e-commerce game to compete.

(Note that Amazon recently rolled out Checkout by Amazon and Amazon Simple Pay, both of which are explained on the Amazon Payments site, and both of which are worth a look to see if either makes sense to incorporate in your existing winery e-commerce system.)

Details on Amazon's Upcoming Wine Program

Tom Merle, a member of The Open Wine Consortium (OWC), has posted details on Amazon's planned national rollout of wine sales online (and as a comment to my original post earlier today, which focused on wine delivery as part of Amazon Fresh home grocery delivery).

Here the important points I took away from Tom's post:

• September rollout
• Winery sets online price, Amazon pays 50% of that to winery.
• Three-tier fulfillment, a la New Vine Logistics (NVL), not distribution line Wine.com.
• Free two-day shipping with Amazon Prime (maybe).  If so, it points to an internal solution for fulfillment, as opposed to outsourcing to someone like NVL.

The Amazon wine buyers may become as powerful as those at Costco, America's largest wine retailer.  Not clear how Amazon will deal with smaller producers with limited supplies of a given vintage.  Or how smaller producers will deal with Amazon (since a small winery really needs to sell direct as much as possible).

 Lots to think about.

Amazon (Quietly) Sells Wine

Without much fanfare, Amazon has begun selling wine as part of their "Amazon Fresh" program which delivers groceries to your door (presently only available in "a limited number of Seattle neighborhoods").

AmazonFresh offers beer and wine for attended home delivery. You must be present to take delivery of the beer and wine. If you appear that you might be 35 years old or younger, we will not deliver without a valid picture identification, such as a Driver's License, Passport or Military ID. We will also not deliver beer or wine if you appear intoxicated.

Currently they show 532 wines and sherries and 20 sparklers, ranging from a $4.11 bottle of Ernest & Julio Gallo Twin Valley White Zinfandel to a $179.99 bottle of 2002 Tattinger Comtes de Champange Rose.

Of course, they're not selling wine online to customers nationwide, but it's an interesting development in the online wine space.  Amazon invested $30 million in wineshopper.com back in April, 2000.  A few months later (August 2000), Wineshopper merged with Wine.com as the dot-com bubble burst.

What would you do differently if your winery's wines were available at Amazon.com?