Monday, September 27, 2010

Another Start-Up Tries to Sell Wine Online

Any article or story about balanced entrepreneurs interests me.  When it is wine industry related you've got may full attention.  Claire Cain Miller hooked me with the title above.  Below is part of an article she wrote about not just the business but the driving force, Lloyd Benedict.  Enjoy!
Despite all the other products we now buy online, Web sites selling wine have struggled. Consumers don’t automatically think of the Web when they want to buy wine, and labyrinthine laws complicate the shipping of wine between states. During the dot-com craze, several wine e-commerce start-ups were born and died.
A new start-up,, is betting that the time for online wine has finally arrived.
The site, which was founded in 2007, has the requisite Web 2.0 tools for wine aficionados. Winemakers can post their tasting notes and tips for tourists who want to visit their vineyards. Wine drinkers can buy, rate, review and discuss wine. A blog offers recipes with wine pairings and interviews with winemakers, and a wine encyclopedia defines terms from “abboccato” to “zinfandel.”’s founder, Lloyd Benedict, is also tapping into the latest foodie craze: buying local. Three-quarters of the 435 wineries that sell on the site are small vineyards that produce fewer than 1,000 cases of wine each year and sell in few or no stores. These winemakers don’t have other ways to reach customers beyond those that visit their tasting rooms and don’t always have the resources to set up their own e-commerce sites, said Mr. Benedict, who wears a “Support Your Local Winemaker” T-shirt to trumpet the cause.
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“People in the United States are producing fantastic wine, but they are barely making it,” said Mr. Benedict, who has seen wineries go out of business in Walla Walla, Wash., where the company is based, because they can’t reach enough customers. “Direct sales are a turning point for them.”
Many start-ups tried something similar during the dot-com, a major online wine seller, has imploded and rebuilt itself several times in the last decade. Other start-ups weren’t so lucky., which sold a 45 percent stake to in 1999 when it first tried to enter the wine business, didn’t succeed and merged with in 2000.
Wine will never be easy to sell online, said Barbara Insel, chief executive of Stonebridge Research, a consulting firm for the wine industry. Wine purchases are driven by recommendations from trusted friends or salespeople, a visit to a winery or a special experience at a restaurant, she said. “You don’t get that just from going to a Web site. It’s the ultimate experiential purchase.”
Still, consumers’ interest in buying wine online is growing, said Jeremy Benson, president of Benson Marketing Group, a Napa Valley wine marketing agency. In the last 30 years, he said, the number of wineries in the United States has bloomed to 6,000 from 300, while the number of wine wholesalers has shrunk to 200 from 12,000. As a result, more and more people visit vineyards, can’t find the wine they want in the store and go online to buy it.
Nonetheless, Mr. Benson said, only 10 to 20 percent of most wineries’ business comes from the Web. hopes to fill that void. The site is free for customers and vintners. When a winery sells a bottle of wine through the site, processes the payment and the wineries are responsible for shipping. Shipping is $15 for one to three bottles and $25 for a case.
Wineries set the prices for the wine, which range from $5 to $1,000 a bottle. keeps 10 percent of that and returns 90 percent to the winemaker.
That is a crucial difference between his business and other e-tailers, Mr. Benedict said. Many of them operate as re-sellers or wholesalers, keeping the wine in warehouses and handling the entire transaction. A typical distributor gives the winemaker 50 percent of the sale price, according to Mr. Benson.
For example,, which is reportedly starting a wine e-commerce service sometime soon, is said to be using a fulfillment service called New Vine Logistics to store and send wine and will give winemakers 47 percent of the retail price. (Amazon did not respond to a request for comment.) operates nine warehouses.
Mr. Benedict said it was important to him to leave distribution up to the wineries — a lesson he said he learned from the travails of wine e-commerce start-ups during the dot-com bubble. “Looking at the bust, I’m dead set on never touching the product,” he said.
One advantage of using a service like New Vine Logistics: it will navigate the maze of confusing shipping laws that govern whether and how out-of-state wineries can ship wine to each state. Thirty-five states allow wine to be shipped into their states, but each has different rules, and most require winemakers to buy licenses, pay sales tax and fill out paperwork, said Mr. Benson, who is also the executive director of Free the Grapes, an organization that advocates easy, direct wine purchasing.
Mr. Benedict said he planned to have a system in place by December to coordinate these shipping licenses so that winemakers on can sell to customers in the majority of states.
Mr. Benedict, who at 24 has only been able to legally drink for three years, said he first became interested in wine when he moved to Walla Walla to attend college in 2002. The region is a burgeoning wine destination.
He started the site with $2 million from angel investors as a free service for winemakers to post information about their wines online for other vintners or for visitors planning a trip to the vineyard. Winemakers quickly asked him to add an e-commerce feature so that consumers could buy wines. He did that a year ago, and 35 to 40 new wineries sign up each month.

1 comment:

  1. I don't have any words to appreciate this post.....I am really impressed ....the person who created this post surely knew the subject well..thanks for sharing this with us.


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