April 28, 2001

11:46 AM

Wine.com Inc. ceases operationsand refers customers to eVineyard, billed as the largest online wine retailer. The email they sent doesn't make it clear if we are now eVineyard members or if we have to sign up again -- and recreate my my 10-page wine.com wish list. Ugh.
posted by thescoop (15 comments total)

Quick follow-up: eVineyard recognizes my wine.com account, but my wish list is empty. Lovely customer service.
posted by thescoop at 11:49 AM on April 28, 2001

Some background info on the changeover.
posted by gluechunk at 12:09 PM on April 28, 2001

It's strange to think that the wine/wineshopper combo company could burn through $200 million so quickly. There isn't a great deal of competition for wine sales on the web, so it wouldn't seem like a price war would have done it (like amazon, kozmo, and webvan selling things below their cost). They could have charged anything they wanted because for most people, it's hard to get a good bottle of wine where they live. Was it wasted on advertising? Too many employees? Too much expansion too quickly?

I'd love to know what kind of sales revenue they were taking in. It's probably because I live within driving distance of napa and sonoma valleys, but I don't know anyone that ever tried buying wine online.
posted by mathowie at 12:53 PM on April 28, 2001

$200 million in 6 years. Jesus... You could go to Vegas with that and have more to show for it.
posted by owillis at 1:06 PM on April 28, 2001

The news article only hints at the core of the problem -- the highly restrictive laws governing alcohol sales that made it next to impossible for anyone not already in the distribution business to get into it. These laws also vary widely from state to state, so each state had to be handled individually, and they never quite got all their ducks in a row.

I read somewhere that most of the "fine wines" (e.g. not the big jug of Carlo Rossi Rose type) sold in the US are almost entirely sold in New York State (mostly NYC). It's not that people elsewhere don't drink expensive wines, just not in much volume.
posted by briank at 2:06 PM on April 28, 2001

I think the warehousing/distribution side of things is probably a nightmare for online wine sellers. Thousands of smalltime importers, zillions of separate lines in the inventory, most with tiny volume, lots of local regulations to cope with, wildly variable quality on stuff you have to buy before you know whether it will be drinkable or not, and all of it taxable assets while it sits in your warehouse undrunk. If you think the book business is irrational (and it is, but not as bad as it was 20 years ago), the wine business makes it look positively Apollonian. I'm surprised anyone makes money from it at all.
posted by rodii at 2:12 PM on April 28, 2001

Wine is, possibly, the only good less amenable to Web sales than books and CDs. eVinyard will be out of business soon, too, croyez-moi!
posted by ParisParamus at 4:01 PM on April 28, 2001

ParisParamus: I agree about Wine sales not suited for web sales, but why are books and cd's unsuitable also?
posted by gyc at 4:05 PM on April 28, 2001

Regardless how tough a biz it is, there are a lot of companies still trying to retail wine over the web.
Winebins.com
Winetasting.com
prpwine.com
thewinereserve.com
etc

But, in the end, I think the wineries are going to be the only ones to make solid profits...
posted by Neb at 4:32 PM on April 28, 2001

yes, briank has the right idea. the kafkaesque laws surrounding direct shipping of alcohol are the main reason that they failed. see this site for more info: http://www.freethegrapes.org/ or http://www.wineaccess.com for a business model that might actually work.
posted by machaus at 6:10 PM on April 28, 2001

GYC, as I said a few weeks ago (I think), (1)books and CDs are significantly (if not primarily) impulse purchase items whose sales is best fostered in a non-virtual store environment; (2) shipping delay is incompatible with impulse or quasi-impulse purchases; (3) shipping costs are higher than local sales tax (3) books and CD are readily available locally for the vast majority of potential consumers. Also, I suspect that we are still in the novelty phase of the Web. Once the thrill of buying on line discipates(real soon for most consumers), Web sales of these items will drop.

It's really important not to perceive the viability of Web commerce through the eyes of tech-oriented people.

Prediction: Amazon.com will be on its way to Chapter 11, or purchase by some other retailer within 1.5 years.
posted by ParisParamus at 9:14 PM on April 28, 2001

But, in the end, I think the wineries are going to be the only ones to make solid profits...

Solid profits? The typical wine purchase is made with about 30 seconds of thought in a store. The hope of the wine.coms was to provide information about the wines, which is a very cool subject, but the information component is too easy to divorce from the purchase component of their business model (just like a lot of people undoubtedly une Amazon.com to check out a book or CD--and then pick it up at the mall).
posted by ParisParamus at 9:23 PM on April 28, 2001

I believe Amazon is making money in their book business but losing it in other categories. I don't buy very many new books on impulse and I'm not sure how many people do. If you're losing $200,000,000 because of restrictive and arcane local laws and you've been doing it for over a year, maybe it's time to hibernate for a while or restrict sales to a single market. Why keep burning money?
posted by rdr at 11:36 PM on April 28, 2001

rdr, which other businesses?
posted by ParisParamus at 9:21 AM on April 29, 2001

Other categories are: electronics, kitchen stuff, software, random beauty stuff, and auctions. As long ago as Feb 2000 Amazon was claiming that the book segment is profitable. Of course, the claim is based on pro forma numbers, rather than real numbers so I would read it with more than a grain of salt. My point is that I don't see any reason that if Amazon stuck to bookselling they couldn't eventually become profitable. I'm guessing that the reason that they felt that couldn't stick to bookselling is that their original business structure (minimal warehouses, inventory cost carried by the publishers) was easily duplicated.

I never understood the whole first mover theory. It seems to me that if the markets hadn't tossed huge amounts of money at dot coms, the internet would have a bunch of VIABLE niche vendors competing against each others.
posted by rdr at 12:50 AM on April 30, 2001