This holiday season will mark the near end of the Flash Sale Wine Sites. What you say? How is this possible? Yes, this is possible, probable, and very much happening. Gone are the days where you would eagerly wait near your inbox looking for the best wine at the best price. Gone are the days where you would boast at parties that your Lot 18 invite is like a VIP tour of Augusta. They are all gone, and here is why.
In the beginning, at Sam’s, we had the original wine flash site long before the term was even coined. It began with a winter vacation in Mexico where I was fortunate enough to share a hot tub with Amazon Founder, Jeff Bezos. I sat in the scalding water much longer than needed just to get one nugget of knowledge from him on why Amazon was so successful. He told me that web traffic peaked between 11a-4p, and that his sales mirrored that usage. Ding…Ding..Ding.
When I returned to Sam’s post vacation, we created Lunch Crush. Lunch Crush launched in 2000 and regularly sold 500 cases of wine a day via an email blast that expired at 4pm daily. So much was the fervor that we had customers call and beg for the sale to be extended to them because work email did not allow for wine websites.
That was then…
Fast forward to the recent past. The web is littered with retooled, closed, pivoted flash wine sites including Lot 18, Winestyr, Woot Wine and others. Here is the problem with the wine flash sale site.
- The customer that screamed the deal and the value they were getting was loud and proud. They could not wait to share the site, deal, price, and availability of the wine they just bought. The problem with that is that the customer could not drink the wine fast enough to support SSS (same store sales), or in this case, continued customer growth. They would buy and buy and then realize that the cellar was loaded, and if they consumed a bottle a day until the Cubs won the World Series, they would still not finish all the wine they purchased. Thus, they stopped buying.
- With the customer over indexing on wine, the website was forced to always be getting new customers. The customer acquisition rate was expensive, and there was never a lull or a plateau where costs became fixed, either marketing or otherwise. They always needed to be hunting for new wine drinkers. That is expensive and difficult.
- Email open rate is now at historic lows. When we would send an email, the open rate was 18%. That was industry leading for the wine world, now the open rate is South of 3%. That is including double-opt in customers. Less opens equals less purchases.
- Google, the #1 free email provider, has introduced an algorithm that pushes promotional emails into a separate folder. Unless you are diligent in scanning all your email folders it is incredibly easy to miss the all important promo emails about a “Super Cabernet under $30 dollars”.
- The rate of new Flash Sites did not mirror the rate of engaged wine drinkers. More sites than drinker’s equals fewer shoppers for all sites as a whole. This equated to lower average cart.
- The flash sites were run by retailers that often used the medium to move old goods, supplier close outs, or private label wines with high gross margin. When the retailer lost the consumers trust, they lost the consumers sales as well.
So here we are, nearly 2015 and the web is still the most viable way to communicate, sell, and distribute libations.
Selling small batch, localized, quality driven wines/ spirits and craft beers will lead the new charge. Consumer driven reviews and websites will move more goods than wine.com ever did. Social communities where your peers, friends, and networks are discussing a brand will move the needle more than K and L ever could.
We are living in a world where the customer has all the power and the retailer is becoming beholden to the bottom up way of selling and buying.
The Flash Sale Wine site needs to morph into a smaller, less megaphoned version of themselves to appeal to localized groups on levels other than price. When that happens, the world will be aligned again.
Expert Editorial
by Brian Rosen, Rosen Retail Method
Rosen Retail for Alcohol Beverage offers support to retailers and suppliers alike, having created Supplier Boot Camp and Retailer Boot Camp and other award-winning programs that increase gross margin for retailers and cases sold for suppliers. Brian Rosen can be reached at brian@briandrosen.com or twitter @rosenretail.
