I recognize the efficiency gains and cost savings provided by the direct-to-consumer model. Still, at first I couldn't help but feel a pang of nostalgia at people purchasing wine online. I feel similarly about books purchased on Amazon. Don't get me wrong - I am one of the many who has embraced online purchasing as more convenient and cheaper than in-store. Why spend more just to schlep a book around that you could more easily have shipped right to your door? But my heart and my head are divided on this - because as much as I love having the cheap version shipped to my door, I love even more the ritual of spending an hour at the bookstore finding the "right" book. The feeling is similar for wine. When I lived in Brooklyn, I had a favorite wine store, Slope Cellars, where I would always go to buy my wine. It was dark and cool and full of people who recognized the importance of taking the time to find the right wine. They would always select for me a perfect wine to go with whatever I was serving for dinner. Which explains my knee-jerk reaction of fear and defensiveness for Slope Cellars and other similar vendors when hearing about the DTC wine channel.
The more I have thought about it, however, the more I optimistic I am that DTC will do more good than harm even for small businesses like Slope Cellars. Similar to those independent bookstores that have persisted despite competitive pressure from Amazon, I think the independent wine store can thrive despite DTC online wine vendors. This is because a good independent wine store offers something that online DTC wine shopping cannot: ritual. Just like reading a real newspaper or strolling the aisles of a real book store, buying wine from a wine store is an experience that cannot be duplicated. Thus, the experience offered by these shops may gain value with the proliferation of DTC wine. Furthermore, brick and mortar bookstores were killed in part by Amazon and in part by ebooks. As there is no ewine to replace wine, the pressure on small wine shops may be less than that placed on bookstores by Amazon. And so I am hopeful that I can have my cake and eat it too. That DTC wine will continue to grow (last year's growth was a strong 18.5%) without causing harm to independent wine shops. Instead, DTC will give small wineries a fair shake at competitiveness and (hopefully) squeeze out those distributors that claim more value than they create in the supply chain.
https://www.winesandvines.com/template.cfm?section=news&content=178968
http://www.forbes.com/sites/timworstall/2012/04/07/amazon-is-killing-the-book-business/#63d6e7dd1e4e
Hey Lesley - Interesting perspective. I’ve recently been thinking about your last point – that DTC channels may allow small winemakers access to a broader customer base. There was an article in the Wall Street Journal last month about wines from Virginia, my home state (https://www.wsj.com/articles/why-virginia-is-for-wine-lovers-1483028736). It notes that “95% of Virginia wines are sold within the state” because “small production numbers and the cost of distribution don’t justify the expense of shipping out of state.” This surprised me. I wonder whether a more robust DTC market would enable wineries that produce and sell locally today to geographically expand. Also in regards to your last sentence, I’m still torn about the role of wholesalers in creating value in the supply chain. While they seem to extract healthy margins, they also help independent wine shops like Slope Cellars, which probably doesn’t have the resources to source from such a fragmented production base nor the volumes to keep costs low. I’d be interested in comparing to the margins and value creation of wholesalers/distributors in other industries.
ReplyDelete