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eBay Enters the Wine Business

The online giant opens up a new road to market for retailers
by Liza B. Zimmerman
June 01, 2016

It was only a matter of time before major internet sales entities jumped into the lucrative wine sales business. eBay has long been a source of rare and hard-to-find antiques and other products, so highly complex comestibles like wine were undoubtedly the logical next step.

When eBay kicked off its online wine sales platform at the end of April, it gave its retail partners access to its 162 million-strong customer base in a familiar user format in 45 states. It is also likely to provide a great opportunity for retailers to supply wine buyers who don't have strong local retail markets or who live in states stymied by numerous shipping laws.

According to Alyssa Steele, the San Francisco-based divisional merchandising manager for home and garden, eBay's entry into the online market was driven by its interest in the $35 billion U.S. total wine market, which has been experiencing double-digit growth in recent years.

The company was eager to fill a "huge opportunity" to provide consumers with what Steele calls a "Fresh, modern way to find wine." The site, she added, enables its customers to seek out "collectible, rare and everyday wines based on varietal, region, price point and more."

The site currently offers wine from 30 countries and 500 regions. They include wine country standards such as Sonoma classics as well as wines from everywhere from Sicily to Lebanon. Consumers can search wines by price point or auction or "Buy it Now," options, that are used by the company for other products. There are also additional options such as free shipping or in-store pick up.

A quick recent look at the site showed that the sales format is primarily dedicated to well-known and commercial brands such as Barefoot Bubbly, Mumm Napa and André. Most prices were $2 to $5 higher per bottle than average national wine sales prices for similar products found on WineSearcher.com.

A handful of wines were less expensive than WineSearcher prices and the bulk of the offerings are from recent vintages. The site also features ratings by Drync, the Boston-based application developer that eBay partnered with to launch its wine sales platform.

Despite the price discrepancies that I saw online, Leo D. Mueller, vice president of technology and digital marketing at the New Rochelle, New York-based Wine and Spirits Discount Warehouse and its GetWineOnline.com website, said that "the profit margins are the same. The prices we charge on eBay are the same we charge on our own website." The store has been working with eBay since April 20, 2016.

Retail Feedback

Operator feedback has been positive thus far as the sales portal has given retailers another free way access to the wine market that comes with a ready-to-use internet marketing platform. Many of eBay's current retail partners had already been working with Drync when the platform launched in April.

"As one of the internet’s 'anchor' stores, eBay is making it easier for millions of customers to access the wines they already love and try new ones," said Mueller. An additional benefit of working with eBay, he noted, is that the sales are guaranteed. "So, the risk of fraudulent orders and charge backs are mitigated."

Through the new sales platform, Jim Nejaime, owner of Spirited Wines in Lenox, Massachusetts, has been able to reach buyers who are outside of its geographic driving range. He started working with eBay at the inception of the program in April and has thus far been able to market a fairly diverse range of wines, including wine bundles of three to 12 bottles that feature mixed offerings such as a Tuscan reds or dry Rosés.

"Every retailer we talk with is interested in leveraging the internet, but few know what to do," said Drync's CEO Brad Rosen. Most retailers, he added, only tend to have "rudimentary websites that drive some amount of sales."

In the context of the eBay partnership, Drync, he continued, is really an integrator sitting between the retailer and eBay. "We make it incredibly easy and fast for a retailer to get their entire wine inventory up on eBay."

"With the Drync partnership, eBay is now able to offer wines across a wide spectrum, from the price sensitive drinker to the explorer to the aficionado. eBay has over 10,000 different wines available," said Rosen. As an added incentive the service also offers in-person pickup which can drive new business to retail operations.

How it Works and Demographics

There are multiple layers to the new sales platform. "eBay and Drync are marketing agents who facilitate the sale of wine on behalf of the licensees, who are wine retailers," explained Rosen. "The retailer controls the selection of wine on behalf of licensees, who are the wine retailers." The retailer is then responsible for adhering to shipping laws.

"The eBay sales process is still a work-in-progress," added Mueller. "The sales process on our own website is streamlined for efficiency and everything is integrated including our line-of-business software [POS] and FedEx account. Orders from eBay have to be entered manually into our POS—including shipping labels. However, we knew this would be the case before we agreed to work with Drync and eBay."

Nejaime noted that client communication, both for inquires and orders, is handled by the eBay portal. Sales are then "billed out through PayPal, rather than through our register system. The process is fairly seamless, and well-planned."

The demographic of the wine buyers using the platform has been very broad, according to Mueller. "We have not done any kind of sales/market analysis of our eBay sales yet, as we are focused on getting orders out as fast and accurately as possible."

Interested parties, Nejaime added, have been "primarily knowledgeable buyers at this early stage, finding wines they have been searching for, or cannot easily get in close proximity to their homes. It's difficult to know the ages, since that information is not evident, except that delivery must be to a recipient over 21. I believe the majority of eBay wine buyers to date have been in the 30 to 60 age group."

The Outlook

The eBay advantage is clearly its large stable of regular customers who are already using the site to make other purchases and are comfortable with how it functions. The consumer segue into easy-to-use and less intimidating online wine purchases is likely to continue.

These types of online wine purchases are likely to pull from the same demographic that finds grocery wine store purchases convenient. These types of Ebay consumers are acquainted with the online brand and can shop for items across categories at one time.

Interested retailers can approach eBay online and complete a registration process, said Steele.

"This is a brave new world of wine selling," concluded Nejaime.
 

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