Focus - Time for wine on the internet?
By Chris Losh | 7 July 2009
Late last month, just-drinks reported that, according to the head of Vinexpo, the internet would never become an alternative to traditional sales circuits for wine. Try telling that to the e-commerce sector. Chris Losh considers the potential offered from e-tailing, going forward.
New technology has always had its nay-sayers. Sometimes - as in those who didn't see gas-filled airships as the way forward - they're right. Other times, they're crashingly, embarrassingly wrong.
And when Robert Beynat, chief executive of Vinexpo, pronounced at last month's Bordeaux trade show that online wine sales would "remain marginal" and never amount to more than 8% of the total, he resembled nothing so much as a seller of horse-feed casting a jaundiced eye over the recently-invented motor car.
Company after company that I contacted for this article reported that its online sales were in the rudest of health, with, at the very least, high single figures, and more often than not double-digit growth.
"Wine in the off-trade online could easily be 10% (of total sales) in five years," says Dan Jago, category manager for beers, wines and spirits at supermarket giant Tesco. "I am sure online will grow proportionally faster than in-store sales over that period. But it's just how really big it could be in ten to 15 years that is interesting."
Admittedly, these increases are often from a very low base, but even a retailer like the UK wine specialist Majestic, which has had a web presence for almost ten years, detects good organic growth online.
"We used to attribute the growth in our internet sales to more people getting connected to the net," says Richard Weaver, the company's e-commerce director."But we can't say that's the case now. I just think more people are becoming comfortable with shopping online."
Even in France, where Beynat was speaking, online wine sales are expected to grow 35% this year from EUR176m to EUR237m. The country's biggest online firm, Chateauonline, has increased turnover 60% since 2005 and, as one powerful European wine merchant put it, "I couldn't predict where our online sales will be in five or ten years time, but I'd expect them to be higher than 8%."
The difference between online versus traditional sales and, say, horse versus car is that no-one is predicting that online will ever eclipse actual shops. With broadband almost ubiquitous now, and probably just about every business or consumer who is ever going to get connected to the web already online, it's safe to say that the first big technology wave has been and gone, and the high street is still standing.
"Online is never going to replace the high street," says Erica Fowler, e-marketing co-ordinator at UK wine importers Bibendum. "But there are some people who are much more confident with the internet, and businesses need to move towards catering for everyone."
Indeed, the advantage of the net is that large sites, such as ChateauOnline can, indeed, offer something for everyone. "We have a catalogue of several thousand wines, which allows us to cater for everyone, from novices to connoisseurs, even investors in Bordeaux Primeur," says ChateauOnline's Matthieu Toulemonde.
In moving forward, e-commerce is likely, more or less, to have to use the technological tools that are already available. There are developments on the horizon, but nothing that is likely to completely alter the way in which users interact with the web.
"The technology is no further on than it was a few years ago," says IT journalist, Ian Murphy. "It's going to be more about how you engage with the people visiting your site."
Engagement, rather than mere sales, is a common theme. And it's an idea that wine sites (certainly outside the US) have been slow to embrace.
Admittedly, wine can't offer snippets of a product in the way that, say, music or video can. But American websites, in particular, have been incredibly active in creating a community, with everything from food and wine recommendations, to chat rooms and weekly (or daily) blogs.
It's all, as IT analyst Bola Rotibi puts it, about (big web buzz word alert) "Stickiness - how often people visit, how long they stay and where they go on your site".
To make the most of this, the wine trade will need, perhaps, to shift its viewpoint; and only when it stops seeking to impose 'wine values' on technology, will it start to really unlock the potential of the web.
"We need to do a much better job of seeing what the web does really well and bringing that into the world of wine," says Majestic's Weaver. "Things like online videos and letting customers have a greater level of feedback. I definitely think we need to be looking at a richer ecosystem around the product. We can do so much more than just offering a wine and saying "here's the price"."
Indeed, part of the problem with websites in general (as opposed to wine sites in particular), is that customers (whether potential or actual) can often be left stranded. Few companies can afford 24-hour helplines, and email contact buttons are far too slow - if there's ever a response at all. Assuming that e-tail is, like retail, about customer service, it's clearly something that will need to be addressed.
The best sites, according to technology journalist Ian Murphy, have instant messaging to answer queries - a kind of virtual shop assistant. But this is not as common as it should be, and almost non-existent in drinks e-tailing.
The final element of making a success of wine online is, perhaps, the most prosaic: that of delivering the ordered product.
"Whilst online shopping is convenient, the biggest convenience that we need to deliver is the convenience of receiving it," says Weaver. "We need systems in place that get people the wine where they want it, when they want it."
Matthieu Toulemonde at Chateau Online agrees. "Ergonomics and practicality [of the site] are key points. But you also need a perfect supply chain organisation to deliver all the orders on time."
Actually delivering the product customers have ordered might seem a sine qua non, yet it's something that e-commerce has struggled with since its inception. Even big, powerful retailers such as Tesco - who operate a business model that is, in every other respect, enviably slick - have come unstuck here, as this journalist has discovered to his cost.
So, wine online: a work in progress, but moving in the right direction. And certainly not likely to grind to a halt at an arbitrary 8% of total sales. Whatever Robert Beynat might think.
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