Ready to Sell Wine Online? What Retailers Should Consider Before Launching an Ecommerce Site
Seven considerations before adding your online wine shop
Unwelcome surprises are hard for any new business, but the wine industry seems to have more than its fair share. And when you’re preparing to sell wine online, these roadblocks can multiply — fast.
Unfortunately, a lot of wine retailers aren’t aware of all the unwelcome surprises that can spring up upon presenting their physical inventory online. There are state-specific licensing fees, shipping costs, and complex refund processes just to name a few.
But learning the lesser-known details about adding an ecommerce option for your wine inventory can better protect you against the surprises you don’t want to encounter — and protect your bottom line.
Selling wine online has nuances that other industries don’t have to navigate like adhering to compliance laws. Gaining insight helps mitigate issues that affect everything: operations, inventory, accounting, margins, and even the back room of your retail space.
Before you set up your online store, here’s what you need to consider.
Out-of-state sales considerations
There are 50 states in the U.S. and that means 50 different laws around the selling and shipping wine. You’ll need shipping licenses for each state you want to sell to. Then, there are state taxes. You’ll need to collect sales tax and remit those funds back to the respective states. If you don’t know where to start with learning the ins-and-outs of each state’s requirements and what you need to do, a compliance consultant can help you find the best course of action. Also, consulting with your accountant and an attorney before you get started will help you gauge the prospects and liabilities you could face.
Shipping rates and strategies
Customers don’t like paying for shipping — no matter what industry. And, unfortunately, common carriers like FedEx and UPS don’t offer competitive shipping rates to low-volume businesses. With these factors at play, you’ll have to devise a smart shipping strategy so you’re not footing the bill for shipping costs and losing money. Shipping Included, or “Free” shipping can seal the deal with customers more convincingly than offering a discount on a product. That said, you could consider recouping some shipping costs in the price of the wine. Other options are to offer free ground shipping on six bottles, or maybe 12 bottles (depending on your target margin compared to the actual shipping rates).
Common carriers will give you a rate grid for what they call “base rates.” This covers the number of bottles (i.e. weight of shipment) going to a particular zone in the U.S., based on your location. Beware: The base rate isn’t your final shipping cost. You’re facing fees on top of those base rates like ASR (adult signature required), a standard for wine shipments, and usually a fixed cost. Fuel surcharges vary throughout a calendar year and are a percentage added to the base rate, depending on the current cost of fuel in the U.S. Home delivery for wine can tack on an additional fee compared to shipping to a business address. An ugly truth is that some carriers bet on the potential that someone won’t be home to sign for a wine shipment, which will then require a second or third trip to the residence — upping the fees. Lastly, an out-of-service area surcharge is added to shipments for rural deliveries.
Wine-Searcher and competitive pricing
Because you don’t have the captive audience you’re used to with your brick-and-mortar space, you may need to get competitive with your pricing. Otherwise, it’s far too easy for consumers to keep scrolling or searching to find a better option. And, you’re competing with other wine retailers nationwide — not just in your local area. If your online product listings land on the first page of Wine Searcher that can boost organic traffic. Although you don’t have to be the leading price, landing too far down the list decreases your chances of gaining new customers.
Offer credits instead of refunds
Setting up a refund policy looks a little different online than it does in-person. To make it easier on the customer, and even more beneficial for you, offer to post the refunded amount to their “credit bank” to put toward their next order. Ecommerce platforms like Figure provide a way for customers to accrue credit for refunds, enticing customers to place an order and come back to buy again. The credit is available for the customer’s next order so they can’t save up credit for the future. Credits can be applied for different incidents like promotions, late shipments, or if a bottle was corked. The idea here is that customers who go to use their credit end up spending more than that credit, are exposed to new wines in your inventory, or potentially find a bottle they love and want to buy again and again.
Take a look around your shop. How much physical space do you have available to run a shipping program? Your backroom needs to be big enough to store shipping materials, extra wine inventory, space to pack orders, hold any lingering “pickup” orders, stack boxes for carriers to pick up, and other such logistics. Then, there’s the act of packing up your wine shipments. Tape coming off a dispenser roll and boxing wine orders is loud and won’t enhance your store’s ambiance. If your backroom isn’t big enough for all of this, you may have to consider an off-site area.
Online customers can’t hold and examine a bottle in their hands. They can’t run their fingers over the label or read the story on the back. Customers need to be able to see the label clearly. In other words: Photography matters. A hasty iPhone picture will not translate well to a website and it certainly won’t translate into a worthy online buying experience for the brands you carry. Sites like SommSelect are a good place to start when thinking about how to display your inventory.
Think about the broader market
You are no longer selling to consumers in your local area. You are selling to every wine connoisseur on the internet. Therefore, if a distributor offers some upmarket wines, at price levels not commonly seen in the brick and mortar location, getting some of those into the online store can help find customers you never knew existed. Just be sure that online store has a filtering option for bottle price, which the right ecommerce platform should have available.
Adding an ecommerce solution to your existing physical location can be a lot less daunting when you know what to expect. Arm yourself with the right strategy and tools, and you can open your virtual wine shop with the confidence to battle any unwelcome surprises that come your way.