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Online vs. offline: what’s the deal with the wine market?

Matcha
Matcha stories
Published in
6 min readAug 3, 2018

Online wine sales are able to compete with offline channels. Indeed, unlike other products such as clothes, the evaluation of the product is almost the same whether consumers buy wine online or offline. Sadly, wine cannot or rarely be tasted when bought in-store.

The global growth of online wine sales is undeniable and faster than that of offline wine sales. The actors of wine e-commerce are more or less the same everywhere: general retailers, pure players, brick-and-mortar websites and wine clubs.

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Yet offline wine sales remain dominant.

Online wine sales growth is fueled by new wine countries

Global online wine sales accounted for $9.8 billion in 2016, more than $10 billion in 2017. It represents 5% of the global wine sale. This tendency is notably led by the expansion of e-commerce and wine consumption in Asia, especially in China.

The most popular alcoholic drink in China still remains baiju. Yet wine consumption is changing and booming (check out our last article). Keep in mind that half of Chinese wine consumers purchase their wine online, with online sales overtaking 20% of total wine sales. Growth of wine e-commerce in Asia is driven by a wider offer online compare to in-store. Furthermore, one main reason Chinese consumers buy more online is because of the lack of product availability offline. Moreover, online experience often provides more information like product description and customer reviews (64% of Chinese wine consumers read online consumer review). It also allows shoppers to buy from their smartphone, m-commerce being native in China: it accounts for 70% of online purchase, compared to 27% in France. Another notable trend is the main role of social media and the ability to purchase from social platforms like WeChat: 50% of e-commerce is driven by social media in many parts of Asia.

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In Brazil, where beer dominates the market of alcoholic beverages, wine is making its way. The country will become another leading actor of the wine market. The proportion of Brazilian consumers that are buying wine online is the third biggest after China and the UK. Brazil already has big online actors such as wine.com.br or e-vino. Indeed, wine.com.br turnover is about €100 million, compared to €60 million for Venteprivée.com, the leading French online wine seller.

In countries considered as new market players, wine sales are simply driven by e-commerce and m-commerce.

In traditional wine countries, offline puts up resistance

The comparison with “established” wine countries such as France, the UK or the US shows different trends. True online sales are also growing with significant strength. However, wine e-commerce is driven by general e-commerce growth.

In the US, online wine sales account for a poor 2% of American wine sales, whereas it is around 13% in the UK. There are two main reason for this gap between the two Anglo-Saxon friends. First the shipping regulations in the US are complex and differ from one state to another. Second, due to its large territory, delivering wine fast and in good condition in the US is more than a challenge. And requires efficient logistic processes that small actors cannot afford. Consumers purchase their wine mainly from liquor or grocery stores. Even the giant Amazon has been struggling… or just performing some reorganization among its wine-selling business units.

Let’s bet that the now famous “Amazon effect” is going to have in the end a positive impact on US wine e-sales. Online food and beverage is fast growing as big acquisitions like the purchase of Whole Food by Amazon testify. This acquisition allows the giant to benefit from a brick-and-mortar retail channel and a wider offer in food and beverage, including wine. Click & collect experiences, such as Amazon Locker, will potentially emerge from the Whole Food — Amazon partnership.

Like the UK, France does not suffer from delivery issues and benefits from short distances plus high population density. French wine e-commerce is more mature and evolve with the growth of e-commerce. In 2017 wine online sales accounted for €1.4 billion, which represented almost 10% of total French wine sales.

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Challenges to boost wine e-commerce throughout the world

Many obstacles to wine online purchase remain. They hinder the growth of e-commerce and its ability to truly compete with offline wine purchase. A historical deterrent is the fear that the shipping or delivery process will damage the wine (bottle breaking, temperature…). Another obstacle is the minimum purchase quantity of the same bottle (e.g. a case of 6) that is often required by online sellers. Buying 6 bottles of the same wine — often a blind complex product — can be very intimidating. Few online sellers offer to make a mix, but it requires a far better logistics. High delivery cost is of course also a barrier since consumers have to buy more bottles to make this additional cost worthwhile.

Source: Sowine

The main deterrent though, is the incapacity of retailers to offer within-2-hour or even same-day delivery. As far as wine is concerned, it is an issue. In fact, consumers are often buying wine to be consumed in the very short term. The challenge is tricky, yet solutions are being explored such as same day or instant delivery. For instance, the French pure-player Lavinia partnered with Amazon Prime Now in 2017 to deliver wines in Paris within 2 hours. Still in France, Franprix is working with Glovo to offer 1-hour delivery to its clients. Smart pick-up is also gaining ground in China: Alibaba has launched a smart automated pickup service available 24/7. Chinese e-commerce giants Alibaba and JD.com, as well as Amazon, are leading the way through the next step of retail: blurring the line between online and offline thanks to smarter and efficient logistics.

The main deterrent though, is the incapacity of retailers to offer within-2-hour or even same-day delivery. As far as wine is concerned, it is an issue. In fact, consumers are often buying wine to be consumed in the very short term. The challenge is tricky, yet solutions are being explored such as same day or instant delivery. For instance, the French pure-player Lavinia partnered with Amazon Prime Now in 2017 to deliver wines in Paris within 2 hours. Still in France, Franprix is working with Glovo to offer 1-hour delivery to its clients. Smart pick-up is also gaining ground in China: Alibaba has launched a smart automated pickup service available 24/7. Chinese e-commerce giants Alibaba and JD.com, as well as Amazon, are leading the way through the next step of retail: blurring the line between online and offline thanks to smarter and efficient logistics.

Matcha, sales technologies for all wine sellers.

Matcha is a BtoB wine tech company, that is offering smart sales technologies for e-merchants, retailers, wholesalers. The startup offers an interactive, intelligent & omnichannel wine sales assistant to guide customers, as well as wine-advice and data augmentation API.

Source :

Ecommerce
Wine
Winetech
Startup

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Matcha
Matcha stories

Written by Matcha

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