Vinfolio.com

As any wine collector knows, it's difficult to find all of the fine wine you want to buy from a single wine retailer.  As noted before in Buying smartly from wine retailers, you increase your odds of obtaining scarce fine wines by concentrating your purchases because most retailers make some attempt to reward loyal customers with priority access.

Our approach to cultivating loyalty 

In early 2007, Vinfolio created a customer priority program.  Benefits increase with reaching higher annual spending levels ($5,000, $25,000, and $75,000+).  The prime benefit is priority buying access to scarce, allocated, and/or highly rated wines.  These wines are generally highly sought after but given excess demand, I'd always prefer to offer them first to customers who have demonstrated their loyalty to Vinfolio.  So that's what we do -- in a very systematic fashion.

How it works 

For newly puchased wines that fit our criteria for scarcity and high ratings, we literally offer these wines in three successive 24-hour periods to an expanding group of priority customers before releasing any remaining unsold wine to the general public on our website.  Wines that sell out at a given level are simply not presented to the next level.  When signed in on our website, priority customers are recognized and wine available at their benefit level is made available to purchase.

Moreover, the email notification such customers receive that announces newly available wines is personalized to reflect whether the customer already owns a wine being offered and in what quantity (based on the contents of their VinCellar cellar management software account).

Bottom line: If your retailer is not reciprocating your loyalty in some proportionate manner to your spending level, then take your business elsewhere.

Note: This post was inspired by a book excerpt titled "Loyalty is a Two-Way Street" from a new book called Marketing Metaphoria that was written up in a recent article in the Harvard Business School's Working Knowledge email newsletter.

Buying wine involves a certain degree of trust by the customer in his/her wine retailer. 

A quick definition of "trust"

As succinctly described in The nature of trust from the Slow Leadership blog, "trust" boils down to four key elements:

1. Meeting obligations to protect others' interests (not just your own)
   
2. Acting with honesty and integrity
3. Openness
4. Keeping promises
   

Applying the elements of trust to wine retailers

Here are 10 ways wine retailers can develop that trust and the resulting higher sales derived from it: 

Wine ratings can be a contentious subject and I've already done my own rant on them last year (see How to use wine ratings successfully).  But I wanted to expand further on the last part of that post addressing how retailers use professional ratings.  Here are a few approaches a retailer could use:

1. Show highest ratings selectively - The selective representation of ratings is the norm for retailers.  The goal here is to promote the highest possible ratings but only when above a threshold to encourage buying.  The quality of the source is less important than the number. The actual commentary on the wine may or may not be provided.  A corollary to this approach is that wines with ratings below the threshold are displayed without their low ratings (the theory being that bad ratings are worse than none).
2. Display professional comments without the ratings - The philosophy here is that the descriptions help sell the wine but the ratings might turn people off so hide them from the buyer.
3. Show all ratings, good and bad - This method provides transparency (at least for an identified set of sources). It recognizes that many wine collectors will independently check ratings using their own paid subscriptions to reviewers' sites if none are provided or a rating is missing.  Moreover, as ratings are only one input into a purchase decision, I could easily argue that a poor rating on a wine from a favorite producer creates buying opportunities as price likely reflects less buyer demand.

Deception?

Let's face it.  Methods 1 and 2 are less than totally honest ways of dealing with customers.

Transparency builds trust 

As far as I know, Vinfolio is the only wine retailer who voluntarily offers up all ratings, good or bad, for a reasonably complete set of professional sources.  This transparency enables our customers to make informed purchase decisions without spending extra time looking up reviews and breeds trust in our brand. 

To be fair, taking this approach is easier for us than most retailers because we pay to license all review content from major reviewers such as Stephen Tanzer, Allen Meadows, Roy Hersh, and Richard Juhlin (see today's press release on the addition of Juhlin and our content partners page).  This content is deployed both in our free VinCellar online cellar management software and within our online store.  So whenever we are selling a wine reviewed by one of these parties, the most recent rating from each source is automatically displayed (without censorship!).  See example below:

In addition to our current licensed content partners, Vinfolio also manually adds Robert Parker and Wine Spectator scores wherever possible (and yes, we would be glad to license their content too if we could persuade them to do so).  But the lack of an automated way of mapping their reviews to the wines we are selling means we will always have "holes" for these valuable sources. Finally, Vinfolio also tries to provide its own ratings and reviews whenever there are none from professional sources (or to supplement them).

The Neiman Marcus brand has earned its well-deserved reputation as a luxury goods retailer providing excellent service.  I would guess that many fine wine collectors are also Neiman Marcus customers just based on their common demographic profile.  So when I read the article today from Wines & Vines describing a Silicon Valley Bank-sponsored marketing seminar for wineries by former CEO Richard Marcus, I was particularly interested in the wisdom being shared.

Here are a few nuggets which resonated with me in the context of fine wine retailing:

• Building a luxury brand - "Offering a top-quality product along with exceptional customer service are essential elements to building a luxury brand."  This is exactly what Vinfolio is striving to do and why our guiding principle is "Fine wine, finer service."
  
• Paying attention to customers - "Each and every one of those customers has value.  Nobody can predict what any given customer is capable of spending.  This means knowing each client."
• Personalize communications with customers - "The question is, are you talking to all of those customers the same way, or are you shaping your communications depending on how that customer has behaved with you?" We use wine specialist staff, analytical tools, an enterprise-class marketing software platform and knowledge of what wines are in a customer's VinCellar account to achieve our goal of personalized (i.e., relevant) communications with customers.

The Financial Times published a story, Amazon to enter US wine market, that infers a new strategic move by Amazon into US wine sales based on a recruiting specification for a senior wine buyer to be responsible for a "massive new product selection."  What's it all mean?

The Opportunity for Amazon

• The $25+ billion U.S. wine market is simply too big for the world's largest retailer to ignore.
• Wine has truly gone mainstream or Amazon wouldn't deal with the potentially negative PR of selling alcohol (see Top ten reasons driving wine's growing popularity).
• Selling wine complements Amazon's move into groceries, which includes national sales of more than 22,000 non-perishable items and a pilot program in Seattle called AmazonFresh that includes perishable items delivered locally.
• Amazon competitors in groceries such as Costco and Safeway sell wine online (see Safeway expanding into online wine sales) so Amazon needs to respond.

Amazon's intentions

While the FT article indicated Amazon declined to comment on its plans, the reference to a "massive" selection implies national online sales as one wouldn't bother to build up a large wine inventory as a mere adjunct to the pilot program of AmazonFresh.

Challenges for Amazon

• Licenses - Selling wine requires Amazon to become licensed in one (or more) states depending on whether they fulfill orders from a single location or from multiple states.
  
• Shipping laws - Interstate shipping of wine involves a maze of confusing regulations that may be a new form of challenge for Amazon's highly regarded fulfillment operation.  Hopefully, Amazon will throw their weight and financial resources behind the SWRA's initiatives to streamline these laws.
• Supply requirements - Amazon's mass market retailing approach implies a focus on wines at lower price points that tend to be available in larger quantities.
• Age verification of buyers - This would be a new requirement to implement in an online context that isn't currently part of Amazon's ecommerce capabilities.
• Perishable nature of wine - If Amazon plans to ship nationally, it will need to contend with weather conditions during shipment that potentially damage the product.

Inherent advantages supporting Amazon's move

• Purchasing clout - Amazon can buy in volume and negotiate better pricing than other retailers (although this doesn't really apply to more sought-after, limited production wines that don't need to offer financial incentives to sell their full production).
• Low shipping costs - If one can use Amazon Prime (free two-day shipping for an annual fee of $79) for a 40 lb case of wine, then this delivers real savings to the consumer.
• Online marketing skillset - Amazon has a reputation for pioneering online marketing features which become industry standards.

Conclusions

• Amazon is well positioned to make inroads into online wine retailing but will need to conquer the same challenges currently frustrating others to succeed.
• The competitive landscape for online retailers selling mainstream, high-volume wine brands is likely to become much tougher.

I'm on a family ski vacation in Utah, which is one of the most restrictive of the 18 alcoholic beverage "control states." A "control state" is where the state maintains a monopoly over the retailing and/or wholesaling of some or all categories of alcoholic beverages.  See Wikipedia definition for a good history of how this practice came about.

Goal of curtailing demand not met

When I arrived in Utah on Saturday afternoon, I stopped by the Utah State Liquor store in Park City to buy some wine for the week for our group. The first thing I noticed was that there were 15 people in line at each of 3 cash registers.  While this was inconvenient because it meant wasting my time, I suppose it was consistent with the Utah state philosophy (by helping discourage buying) as listed on the Department of Alcoholic Beverage Control (DABC) website:

"Utah's liquor laws are based on the general philosophy of making alcoholic beverages available in a manner that reasonably satisfies the public demand.  In this respect, however, the state does not promote or encourage the sale or use of alcohol." (emphasis added)

Maybe Park City is an exception because of the tourist traffic but it seems like demand has not been moderated by state policies.

No benefit of state stores vs. privately licensed agencies

Utah operates 36 stores and 100 "package agencies" (click here for details).  The latter group is simply an extension of the state operation with all products still being purchased from the state acting as the wholesaler.

The only possible argument I can think of for perpetuating Utah's (and other control states') anti-free market regulatory structure is that it somehow makes enforcement of liquor laws more effective.  But how?

If all the stores were state-operated, then perhaps they could claim that employees of the state were better trained than those in the private sector to enforce age checks rigorously when selling liquor.  But Utah has 100 private parties who are licensed to sell alcohol so they presumably have already had to create an enforcement mechanism to monitor sales through these outlets (as have the 32 non-control states).  So what real purpose is served by operating stores (and being the sole wholesaler)?

Wine selection is limited

Utah publishes its price list online (all 151 pages in February 3rd list, not searchable).  While the length of the list may seem impressive, this is for all alcohol, not just wine.  More importantly, just because a product is listed does not mean it is available.  If one looks at red Bordeaux (see pg 112), for example, there are a grand total of 150 items listed (including some first growths).  But when I inspected the selection at the Park City store, there were less than 20 items to choose between (and they were not the better ones in the list of 150)!  In contrast, Vinfolio's current selection of red Bordeaux numbers 293 items available to order.  Maybe limiting selection is the real strategy for trying to reduce demand.

Lack of out-of-state purchase option

According to the Utah DABC website, "private individuals may not lawfully import or transport [liquor products] into the state."  Also, "you may not bring alcoholic beverages into Utah for any purpose whether it be for personal consumption, to serve at your hospitality house or at a private social function, or to give it or sell to others."  Forget about Fedex'ing it either, as friends who have tried to do that have generally not succeeded and they've incurred double shipping costs when the wine is returned.

Bottom line: The "control state" approach for regulating alcoholic beverages does not serve consumers' interests nor does it in itself help achieve the typical control states' objectives.  If the control state's goal is not promoting or encouraging consumption, this could easily be achieved via a licensed-based regulatory model together with a law prohibiting advertising or promotion of alcohoilic beverages.   A licensed-based model without expanded sourcing channels would dramatically improve the range of wine selections available to consumers.  Out-of-state retail purchases could also be enabled with an appropriate shipping permit system requiring sales taxes to be collected and sales reports to be filed.

Alder Yarrow of the #1 wine blog, Vinography, seems to have kicked off a firestorm with his post of today entitled Wine.com Gives Retailers (and Consumers) the Finger.  This was then picked up on the equally popular Mark Squires Bulletin Board on eRobertParker.com in a post titled Shipping-Related Outrage: Wine.com Goes Ballistic.  At the time of this post, there are over 100 comments between the two threads.  What's going on?

Direct shipping laws are the real problem -- Again!

Once again the central issue revolves around this country's perverted direct shipping laws for wine.  The outrage being expressed stems from the tactics Wine.com employed in its attempt to create "a level playing field for all wine sellers" (in itself, a laudable goal).  However, those tactics were not aimed at changing the laws directly, but instead at encouraging regulators to more rigorously enforce those perverted laws.  In a comment posted to the Vinography thread, Wine.com's CEO states "if we can use our legal standing in a state to get their attention to the issue, maybe we can bring about changes [re: shipping laws] that will benefit the online wine business."  Maybe.  But based on the wine-consuming public's comments on the posts noted above, they seem to disagree vociferously.

What will it take to change wine shipping laws?

The wine retailing community finally started getting organized in late 2005 when it became clearer that the Granholm Supreme Court decision was not going to translate into equal treatment for all wine sellers.  This is when the Specialty Wine Retailers Association (SWRA) was born.

Retailers' self interest ensures they are making an effort with serious time and money to pursue litigation to remedy the current discriminatory situation in most states.

As Tom Wark, Executive Director of the SWRA, points out in his comment (#75) in the Squires thread, the other largely-missing-but-necessary ingredient for success in this effort is consumer involvement.

What sort of consumer involvement is needed?

• Speak up to your state legislators.  If enough people become active, they will listen as you keep them in office.
• Donate directly to the SWRA.  Litigation is expensive and it must be pursued on a state-by-state basis.  Each state's effort typically costs a minimum of six figures and can easily reach $500,000 or more in a protracted legal battle versus better funded wholesalers.  If only 100,000 wine consumers donated $25 each (the cost of one modestly priced bottle of wine), it would make a huge difference to SWRA's resources.  Donate now.
  
• Use your buying power to influence retailers to join the SWRA.  If you buy from out-of-state retailers, find out if they are SWRA members.  If not, buy elsewhere or encourage them to join.
• Stay informed on the issues.  Sign up for the free SWRA newsletter via email.  The SWRA is the only trade association seeking to protect your rights to buy wine from out-of-state retailers.  Keep in mind that the laws have evolved to treat wineries separately from retailers (in my opinion, because wineries were politically organized at a time when retailers were not so retailers were "thrown under the bus").

Bottom line: The wine retailing community needs to act together to right the wrong of the current state of wine shipping laws.  The SWRA is the vehicle to organize the fight and can provide the leadership and a meaningful component of the necessary resources to win.  But, you, the consumer, have a vital role to play.  Make yourself heard!

Wine-related online traffic in the 2007 holiday season is up 35% from 2006 versus 15% for overall e-retail traffic according to a news story this week in Wine Business Online, Online Wine Sales Flourish During Holidays. 

Additional evidence supporting growth in online wine sales

Vinfolio (which only sells wine online) experienced an even steeper increase of 45% from the prior month.  The chart below shows average weekly new user sign-ups for the last two 4-week periods.  While we are growing rapidly, that increase is much larger month-to-month growth rate than normal.

Easier interstate shipping by retailers is NOT a driver in online wine sales growth

As noted in a prior post, 92% of wine consumed by "core drinkers", only 20% of weekly (or more often) wine drinkers bought wine online in 2006.  The reasons to buy online are compelling (e.g., greater selection, better prices, and convenience) and I believe these factors are probably what's  driving 2007's increase.  But a relaxation of interstate shipping rules for retailers is certainly not a reason. 

If anything, while the 2005 Supreme Court decision Granholm vs. Heald caused improved shipping laws for wineries, they've gotten worse for retailers.  For example, Illinois voted to ban out-of-state retailer shipments after 15 years of permitting them while simultaneously permitting wineries to continue shipping.  In addition, Texas is fighting (unsuccessfully so far) to ban out-of-state retailer shipments too.

As the Executive Director of the Specialty Wine Retailers Association, Tom Wark, points out in a Wine without Borders blog post titled Michigan Judge: "Retailers covered by Supreme Court Decision":

"Since that groundbreaking Supreme Court ruling, distributors across the country, as well as some State officials, have been arguing that because the case specifically concerned wineries, the principles of non-discrimination explained in the ruling did not apply to wine merchants, just wineries.

This is like saying that because Brown v. Board of Education was a case argued on behalf of an African American girl, it is still constitutional to pass laws that discriminate against Hispanics. That’s ludicrous. So is the view that wine retailers can be discriminated against when it comes to wine shipment laws."

Bottom line: The true potential of online wine sales has not been realized and won't be until the interstate shipping laws are changed to create a level competitive playing field for retailers.  When the laws are changed, and they will be, you'll really see online wine sales boom.

A little noticed news item in The Napa Valley Register on September 30, 2007 would seem to signal an expansion of online wine sales by the major grocery chain, Safeway.  From a quick check of Safeway's shopping site, one can already order wine online (2,147 items listed on Winesearcher.com) but only for local delivery.

What happened?

1. The American Canyon, CA planning commission approved a conditional use permit for Safeway to open an office that will be licensed to take online wine orders.  When the office will open is not determined yet.
   
2. Orders will be shipped Fedex with warehousing/shipping support by New Vine Logistics, a major wine industry fulfillment house used by many wineries for (almost) national shipping of wine -- 36 states can be shipped to via NVL according to the services description on their site.
3. Given the maze of shipping laws that wine retailers must contend with, it's not surprising that Safeway is starting off cautiously by taking online orders only from California residents.

Why it happened

1. Safeway no doubt has noticed the success that Costco has had in the wine category, including Costco's online wine sales initiatives which are currently limited to 5 states (CA, IL, NM, OR, and TX).
2. Wine is a huge retail category with $25+ billion in retail sales annually.  That's too big a pie to ignore.
3. Consumers are increasing their online spending in all categories and offering wine online enables consumer needs to be better met.

Why it's significant

1. The fact that the director of Safeway's national direct business was involved in securing the approval and her comment that there "potentially" could be other offices signals broader ambitions.
2. New Vine Logistics' ability to support out-of-state shipping from a single location also implies sales beyond CA might occur in the future.
3. Major national retailers like Safeway and Costco seeking growth in online wine sales is a very positive development for consumer direct shipping initiatives such as those of the Specialty Wine Retailers Association as it should inevitably bring additional support to bear.

Buying wine on pre-arrival often gets a bad rap as in a June 5, 2007 article appearing on Wine Spectator Online titled "Pre-arrival wine purchases are only for patient people."

Definition of Pre-arrival

"Pre-arrival" is a term used to describe wine offered for sale prior to its arrival at your retailer.  Why would your retailer do this?  Because faster sellthrough of inventory creates a better return on capital which in turn keeps consumer prices lower.

Pre-arrivals can be created when a retailer buys wine from any source if the retailer chooses to begin selling before the wine has arrived.  Sourcing from a local distributor or directly from a producer (e.g., a Napa winery) simply means a shorter wait (a few days to a few weeks) than if the retailer sourced the wine directly in Europe (which could take 3-6 months or longer).

Reasons to buy pre-arrivals

1. Snooze, you lose - It's common industry practice for highly sought-after wines to be sold as pre-arrivals.  If you wait, you may not be able to buy the wine later at similar price levels (or at all).
2. Lower prices - There are various reasons contributing to lower prices such as (a) better retailer capital utilization and (b) the fact that there are often fewer parties (and mark-ups) involved in the supply chain.
3. If you're cellaring the wine anyway - For most collectors, much of what they buy on pre-arrival is not for immediate consumption and will be cellared.  Therefore, whether the wine arrives in one week or six months is generally less important than securing the wine at a good price.
   

Areas of confusion

1. Futures vs. Pre-arrivals - The term "futures" is analogous to "pre-arrival" but is normally associated only with new releases.  See a prior post (Wine futures and pre-arrivals: what's the difference?) for a full explanation.
2. Type of wine - Pre-arrivals may apply equally to newly released wine or a 20-year old vintage.  For example, Vinfolio routinely sources both newly released and older vintage wine in Europe and sells all of them on a pre-arrival basis.
3. Free retailer use of your money - Most people I speak to about pre-arrivals bring this point up.  There is no such retailer benefit (at least for a reputable retailer).  Speaking for Vinfolio, our standard is to pay all international sources within 15 days of making our purchase commitment (and sometimes we do so immediately to secure a parcel others are competing to buy).  Payment is clearly required before foreign sources will release wine to our logistics partners.  The sooner it is released the sooner our customers get it.  Receiving their wine, in turn, tends to generate further orders.

Questions to ask your retailer

1. When is the pre-arrival expected?  How often are the retailer's estimates wrong?  Vinfolio provides timing estimates for every pre-arrival wine in our online wine store.  There are some factors the retailer cannot completely control which is why they're only estimates.  If you absolutely need wine by a fixed date, either avoid a pre-arrival purchase or ask your retailer when the wine is arriving before your buy (and give yourself some extra room for delays).
2. Does the retailer have a written invoice confirming its own purchase from the supplier?  There are retailers who broker wine they don't own (and don't have on reserve with a supplier) on the theory they can backfill the supply based on orders received.  When they can't, your order tends to get cancelled.
3. Are you notified proactively by the retailer upon the wine's arrival or is the responsibility yours to remember to chase them?  Vinfolio emails customers automatically when wine is received in our warehouse.  Customers may also check order status online or call/email our Customer Service department any time.  For many other retailers, the onus is on the consumer to manage their records and remember to chase the retailer until their wine is delivered.  Note: Vinfolio's free online VinCellar software is designed to handle tracking pre-arrivals from any retailer as part of its capabilities.
4. What's the retailer's history of failing to deliver and what are you offered as compensation in such a circumstance?  If the market value of a wine has appreciated since you ordered it, getting your money back is an inadequate remedy for the retailer's failure to deliver.  While we have not had to invoke it, Vinfolio has a published policy described in our terms (listed on our site) which includes a 125% refund.  

Conclusions

Pre-arrivals generally serve the collector well but understanding how they work helps set appropriate expectations.  As the Wine Spectator Online reporter discovered, where you buy your pre-arrival also makes a big difference to your experience.  For advice in that realm read my prior post, "Criteria for selecting a good wine retailer".

We're delighted to be named in the "10 best online wine shops" by Food & Wine magazine in their June 2007 issue.  Read the excerpt about Vinfolio or the full article.   Vinfolio is also singled out for its strong wine guarantee in the first tip in a sidebar called "Tips: Things to know before you buy."

Updates to the article's content

• Our revenues have always been dominated by wine retailing (95+%), not storage.  This is merely a reflection of where wine collectors spend their cash (i.e., on consumption).  We do offer full-service storage services, in part to support our retail activities.  E.g., we provide 6 months of free storage on purchases to enable shipment during moderate weather conditions.
• Our "recently launched" web store was released in September 2006 and was our second generation online store (admittedly, a huge improvement over the first one).
• Every customer is assigned a wine specialist to provide wine recommendations and advice by phone or email (there's no minimum spend requirement). The article is actually referring to our Collection Building advisory service which is a more involved "consulting" exercise performed at no charge provided a minimum of $10,000 is spent on initial wine purchases.

If you're not already a customer, please give us a try and learn what we mean my our guiding principle, "Fine wine, finer service."

Retailers should take a page from the playbook of the wine wholesalers in terms of how to succeed in the wine direct shipping wars.

Consider the following remarks extracted from a speech made on May 1, 2007 by Craig Wolf, the President and CEO of the Wine and Spirits Wholesalers of America at their 64th (!) annual convention:

• "We are unstoppable when we are united."
• "One of the easiest ways you [wholesaler members of the WSWA] can become more involved is to contribute to the PAC [political action committee].  WSWA's PAC is and needs to remain one of the industry's largest.  It is an essential tool to advancing our Government Affairs agenda."
  

Why retailers need to unite and join the Speciality Wine Retailers Association

1. Unfortunately, the best interests of consumers and Constitutional principles do not always prevail without a defense.   Until the creation of the SWRA in 2005, there was no defense against wholesalers buying political access to accomplish their "agenda".
2. The wine retail industry is inherently more fragmented than the wine wholesaling business which makes the task of acting together more difficult.
3. Financing the battle against "one of the industry's largest" PACs, which mostly means paying legal bills and lobbyists, is extemely expensive and requires the broad participation of wine retailers to share the financial burden against well-financed wholesalers. 

Your role as a consumer

As Tom Wark, the SWRA's Executive Director, points out in a Fermentation post yesterday called "A 'force of voices'", "consumers and wine retailers are natural allies in this strange battle."

The best things you can do to support a national market for wine are:

1. Encourage your favorite retailers to join the SWRA and patronize retailers who are SWRA members to help them finance the campaign.
2. Stay informed about wine direct shipping developments in your state and be prepared to contact your state representatives on short notice to make your opinions known on pending legislation.  This is why the SWRA created their Consumer Outreach E-mail List.  Click on the link now and sign up.  There is nothing more powerful than a constituent registering his or her  opinion.

Disclosure: Vinfolio was one of the SWRA's founding members and I continue to serve on the Board of Directors.

The wine retailer Premier Cru in Emeryville, CA, doesn't think so.

Premier Cru stopped accepting returns of open bottles two years ago according to Daniel Sogg in his story titled "The right to return?" in the May 15, 2007 issue of the Wine Spectator.  The rationale offered by co-owner John Fox in the article is "It's the lack of knowledge by the consumer...most people who say a wine is corked are confusing it with something else, like [the leathery, earthy character of brettanomyces], or they just don't like it."

While some consumers may get it wrong, it's not likely 100% of them do which is what Premier Cru's policy assumes.  On the other hand, perceived "unfair" treatment is one issue which riles consumers and drives them elsewhere.  So even if the consumer is wrong occasionally, the value of retaining the customer outweighs any cost of a return.

For more behind the Vinfolio philosophy, see my prior post, Returning faulty wine to retailers. In addition, read our current wine guarantee and returns policy.

A recent thread titled "Wine-Searcher used for teasers?" appearing on the Mark Squires' Wine Bulletin Board on the eRobertParker site struck a chord with me.

Most wine collectors use one or more of various wine price comparison engines to search for a wine they're interested in buying.  Winesearcher.com is the most popular of them.  A common problem encountered by users is that the wine being advertised is often "just sold yesterday" or otherwise not available when the collector seeks to buy it.  Are retailers engaging in "bait and switch" tactics?

Retailer input is a big part of the problem

1. Data collection by "scraping" - Most data appearing in Winesearcher is collected by "scraping" it from the retailer's web site, meaning a software program "crawls" the retailer site's unique layout and attempts to strip out the relevant information to populate a listing.  This is inherently problematic as every retailer site is different and site layouts get modified periodically.
2. Infrequent update frequency - Winesearcher on average updates a given retailer site "at least once a week."  Ideally it would be daily and it can be if the retailer makes a data feed available to Winesearcher to avoid the site scraping process (which is what Vinfolio does).
3. "Technology-challenged" retailers - Most retailers are small businesses (often rooted in a "bricks-and-mortar" operation) that are slow adopters of new technology that's needed to facilitate online sales.  Tasks like maintaining an accurate real-time inventory are not easy for them (as hard to believe as that may be for an inventory-driven business).
4. Listing of "sold out" wines - Many retailer sites complicate the accurate scraping of data by listing prices for sold out wine.  One search engine competitor of Winesearcher told me he believes that over half of the retailers' sites they scrape do this.
5. Brokered wine - Brokered wine is by definition wine that the retailer is marketing but does not own.  This is very problematic for the collector because there may be many retailers offering the same physical stock of wine from a single wholesaler.  A purchase request must first be confirmed with the supplier which often takes 1-2 business days and the wine may have been sold to someone else in the interim.

What you should expect

1.  "Garbage in, garbage out" - I'm exaggerating to make a point but given the 5 factors noted above, is it really a surprise that advertised wine is often not available when you call?
2. Hot wines - Newly reviewed wine with high scores tends to create a feeding frenzy among collectors looking to buy it.  Given the site update frequency and an "instant" surge in demand, you should expect to hear "sold out" or new higher prices for legitimate reasons.
3. Non-sponsors - Winesearcher charges retailers $3,150 per year for priority display of the retailer's listings in the free version of their site.  If a retailer is spending that much, their interest in maintaining daily, accurate price lists is probably higher than a non-sponsor.  Sponsor names are bolded and non-sponsors are not.  So if you encounter a non-sponsor, I would expect a higher probability of less accurate inventory information.

A recommended strategy for users

1. Subscribe to Winesearcher Pro - As pointed out in a prior post, this is a no-brainer.  Do it as the enhanced features provided are essential for dealing with the inherent data issues already noted.
2. Read price date stamps - Every price is date-stamped.  Older prices are more prone to problems.
3. Report problems - On every results page, Winesearcher has a feedback link for reporting issues with data.  They are very responsive.  For the sake of the community's use of the information, please take a minute to report problems.
4. Exclude merchants - The Pro version of Winesearcher enables you to exclude merchants from being displayed in the results of your searches.  So if you've concluded a particular merchant never has the wine when you inquire, or is unable to ship to you, just exclude them.
5. Developed preferred retailers - There is more to buying wine than the absolute lowest price.  Read another prior post: "Buying smartly from wine retailers."
6. Use Vinfolio's quote request service - If you're having a hard time tracking down a wine, let Vinfolio do it for you.  We accept quote requests on literally any wine.  If we locate it amongst our suppliers or customers who use our free VinCellar online cellar management software, we'll quote you a price with no obligation to proceed.

Ideas for improving Winesearcher and other search engines

1. Develop retailer rating system - The user community can police bad retailer practices.  Most price comparison engines in other sectors provide this capability.
2. Eliminate "sold out" prices - This data is not relevant to any user and contributes greatly to the effort required to actually locate a retailer with the wine to sell. It also skews the validity of the price data displayed as often the lowest prices are the ones where the wine is unavailable.
3. Identify brokered wine to users - Each price should have an attribute which identifies it as a price representing a brokered wine versus a wine that is owned by the retailer and available to sell immediately.  Note that "available to sell" could mean the wine is "in stock" or still on "pre-arrival."  The retailer should have an invoice confirmation from its supplier for wine that is available to sell immediately.  E.g., Vinfolio often sells wine on "pre-arrival" as we start selling it as soon as we've purchased it.
4. Display quantity available - For any retailer providing a data feed to Winesearcher, providing quantity available information is easy to do.  The quantity is obviously accurate only at the time of submission but it still provides an indication of the maximum quantity likely to be available.  While it won't be possible to capture this information from all retailers, those that provide it are likely to get a higher degree of patronage from Winesearcher users.  This should motivate others to work towards making it available.
5. Enable greater filtering of results - Why not let the user filter on the date of the price listing, a new "quantity available" field, or on whether the wine is brokered or available to sell immediately?

 Have other ideas?  Post a comment.

Five tips for gaining an edge when buying wine from retailers:

1. Identify your preferred wine retailers – Who offers what you like to buy?  Are prices consistently fair or do you feel the need to check them on Winesearcher.com every time?  See prior post on Criteria for selecting a good wine retailer.
2. Concentrate your purchases – There are two primary reasons to do this.  Whether formally or informally, most retailers will offer higher spending customers access to hard-to-find or highly allocated wines before others as a reward for their past purchases.  Second, if you’re shipping wine, it’s far more efficient to do so in case quantities which are easier to hit if you buy from fewer sources.
3. Retailer’s email offers – If you want a wine listed in an offer, act quickly.  In all likelihood, thousands of others got the same email at the same time.  Better wines tend to be sought after and available in limited quantities.
4. Discover new inventory before email offers are sent – The secret is using RSS (really simply syndication) technology, something which Vinfolio offers but few others do.  RSS “feeds” provide real-time notification of inventory additions grouped into either predefined wine categories or matched to totally personalized criteria tailored to your particular wine interests. You decide which feeds to subscribe to (or create) and can unsubscribe any time. You also can combine feeds from multiple sources into your "reader" which provides further convenience in grouping related content from different sources. Learn more by visiting our RSS page.
5. Use Vinfolio’s “quote requests” – If we don’t have a wine in inventory, find the wine in the “Other results” tab within our wine store and click on the “Get quote” button.  Our buying team will seek out the wine and provide a price quote if found or we’ll monitor availability and notify you automatically if we come across it in the future.  There’s no obligation to proceed if a quote is provided.  Requests for 6+ bottles or valued at $250 or more are give priority.

This post was inspired by a post on Vinography titled “Is that e-mail wine offer a good deal?”

1. Price competitiveness – Are mark-ups fair and consistent? Or do you feel the need to “price check” every purchase against alternative sources?
2. Selection – This encompasses both the number of items carried as well as the quality level and price points within a category. Does the retailer’s relationships enable unique wines to be offered not generally available elsewhere? Are mature wines from private collections available? What about a large and small format bottles?
3. Special orders – Can the retailer accommodate finding a “wish list” of your wines that they may not normally carry? Are there minimum quantities required?
4. Reviews and other data – Does the retailer share all available reviews, good or bad, from major critics to save you the time of researching them independently? Does the retailer author their own reviews? What about comparative retail or auction price data?
5. Staff wine knowledge – How deep is it? Can you easily access advice and recommendations? Do you have a single point of contact that is “your” person? Are recommendations tailored to your interests? Are there frequent tasting or other wine education opportunities (including foreign travel to wine regions or expositions) made available to staff?
6. Ease of ordering – How easy is it to buy? Is their wine inventory online updated in real-time? Is the stock status of the wine disclosed (i.e., in stock or pre-arrival)? Is the purchasing process streamlined and time efficient? Are orders confirmed promptly?
7. Customer service – Is it clear from the retailer’s site that service is a priority or is it an afterthought? Is there a dedicated customer service staff? Is it easy to figure out how to make contact with someone who can solve a service problem? Can you track the status of your orders online? What about online copies of purchase invoices? Is there a robust FAQ section of their web site?
8. Return and cancellation policies – Are there written, published policies governing returns and cancellations (plus all other aspects of conducting business with you)? Can you return a corked bottle or otherwise faulty bottle without a hassle? What about guarantees on receiving pre-arrival purchases?
9. Climate-controlled warehouse – Does the retailer store its inventory of wine in appropriate 55 degree and 60-70% humidity conditions? Can you keep your purchases there at no charge for a reasonable period? What if you need to store for an extended period? What about purchases made elsewhere? Are fees by the case?
10. Shipping – Does the retailer ship to other states? Internationally? Are tracking numbers automatically sent upon shipment? Are you notified about failed delivery attempts? Are shipments insured automatically or are there additional charges? How competitive are the shipping rates? Does the retailer have policies in place to ensure shipping only during appropriate weather conditions? Can the retailer assist in arranging freight forwarding services for large shipments (e.g., 40+ cases)?
11. Local Delivery –Does the retailer offer local delivery services in your area? Are the retailer’s delivery trucks temperature-controlled? Is there a minimum required to have a free delivery? What are the other terms?
12. Selling customer wine – Does the retailer assist customers in selling their wine? Will they buy properly cellared wine for cash or store credit?