UPDATE 25 Feb 2011: The September earthquake turned out to be the small one with no deaths. Now it looks like this one will have up to 300 people dead (aout 90 confirmed at this stage, the rest are buried.

However Decant still survives! Here’s an email message from them,

Hello from Decant, Our thoughts are with you all at this time.
Many thanks for the kind wishes and words we have had from around the world, to let you know we are all safe and once again have been extremely fortunate as far as damage and loss goes.
We will re-open tomorrow from 10. am till 4.00pm. We have things like water and milk if needed as well as the obvious. There will definitely be something open for a taste, so maybe even if you just feel the need to get out and have a chat please feel free to visit.
The wine shop will be open next week – 10.am -4.00pm, but the Cafe will be closed until we get the water situation sorted. take care stay safe.
David and Juliet

*****

A wine store near the epicenter of the 7.1 earthquake that struck Christchurch New Zealand last week sent this email and photo to their subscriber list:

*****
Hello from Decant,

A picture says a thousand words. The attached photo epitomises how lucky we have been. Yes, it is a bottle of Sauzet Puligny ‘Folatieres’ Premier Cru ($155.00) that took a dive off the top shelf only to embed itself into a carton below and survive.

Sauzet Puligny 'Folatieres' Premier Cru - a lucky escape. Photo Credit: Decant Wine Store

Unfortunately not everyone has been so lucky and our hearts and best wishes go out to all of you who have been affected by the earthquake.

If there is anything that we can do to help, please give us a call. We have already had requests for insurance valuation help on both the wine and glassware fronts.

As for us, it’s business as usual again. The coffee machine is flowing again and a pile of new wines have arrived instore. For those of you that need to escape the house this weekend, we’ll have a bottle or two of things new open to try.

*****

I’m amazed Decant is back up and running so quickly. Credit to them as well as Civil Defense, civil engineers and the wider Canterbury community.

This is their address: 61 Mandeville St, Riccarton, Christchurch. A Google map below shows them just to the west of a big central city park – Hagley Park – to the east (or right) of the park is the CBD area where most of the TV footage of damage is coming from.

View Larger Map

Good luck to you David!

No related posts.

The problem is the search engines

Most normal retail websites do a brilliant job with the shopping cart and the catalog but struggle to give the search engines and social media sites what they want.

This is because they are focused on the eCommerce technology first

Not on an overall process, or system (fair enough too, wine eCommerce can be very complex).

And that’s what my new service does, it puts in place a system to generate sales. To take you from the back alley of the internet onto Main St.

Does it use eCommerce software?

The system can use existing or third party eCommerce software – but the very core of it is blogging. The best way of doing this is using software called WordPress (though it may be able to use your existing website software).

To see how the System works check out the new Service for selling wine online.

The MyLocalWineStore System

Here’s a Summary

• Search engines like unique content
• What search engines look for the most
• Show Google that you are an expert wine store
• Boost traffic with Adwords
• Use Social Media to spread your word
• Make it easy to buy
• Use professional email marketing software
• Start creating content
• Here’s the solution – it’s a process called the MyLocalWineStore System
• DIY or do it for me
• eCommerce software optional
• Where do I start?

Go to my Services page for more.

Related posts:

1. Wine eCommerce website: Custom Built or Off-the-Shelf?
2. What’s the difference between a mobile website and an app?

If so here is a simple way to find out, just go to google.com and search for relevant phrases like wine shop 90210, pinot noir, brand X … and see who dominates the search engine results page.

I did this for a wine shopper located in zip code 90210 in the States (i.e. Beverly Hills).

Firstly I set my search query to zip code 90120 (ask me below if you want know how). Then I searched for the keyword wine.

All the major online retailers are advertising in Google Adwords (“sponsored links” on top and right hand side). The “organic” links (left hand side) have similar results though confusingly with some computer software also called Wine. The keyword wine is obviously popular with all the ad spots taken. Note I reload the page near the middle of the video and come up with some different search engine results which I discuss below.

Please note you’ll probably want go  to youtube and watch it in a larger size at HD 720p resolution.

What stands out to me is the physical addresses under the ads – especially K&L Wines. If consumers wanted more trusted, and cheap/quick delivery I’d say they would check out the local stores first.

Also note that the major wine retailers take up spots on Adwords and the organic search results. This may seem inefficient but what they are doing is,

• excluding other competitors (like you!)
• gaining greater presence on the page results, which arguably leads to more credibility -and more clicks.

There are always ten official “organic” results for a keyword. When I “refresh” or reload the page half way through the video only four of these organic results are visible on my laptop screen! They are: Wine HQ (the software), wine.com (the only store), and two wikipedia entries.

Below these listings are shopping results. Surrounding both are Adwords with between 8 and 10 wine ads (changes each time I reload the page).

In short if you want to be on the first page of google search engine results (and you do) for the keyword “wine” (which you may not) then you’ll need to use Adwords even if the wine consumer is searching the internet just round the corner.

Talking about round the corner… I then searched for wine store 90210.

(Please note you’ll probably want to go to youtube and watch it in a larger size at HD 720p resolution.)

Google Maps or “Local Business results” dominated the top part of the page. When you clicked on these links you get all the locations of local businesses near 90210 (including others in nearby zip codes). It also showed citysearch.com (or yelp.com) results further down the page.

So the first the thing you should do is make sure you have taken care of your Google Places account as well as other local services such as yelp.com, citysearch, and foursquare.com.

Next I put in the search Kosta Browne Russian River Valley Pinot Noir. I get the winery itself, a wine store (that I’ll come back to) and various shopping comparison sites. I hate to say this but given that Kosta Browne is Californian the consumer is likely to buy direct from the winery – but that’s not your only issue.

(Please note you’ll probably want go go to youtube and watch it in HD 720p.)

The Shopping Results are based off something called Google Base. This is a feed (a special link) you give Google. Google then adds it to this shopping results list – sort of like it’s own big webstore but linking to the retailer’s shop. Other shopping feed sites include snooth.com and cellartracker.com. Note some of these require a commission to be paid.

So the next thing you could do is see if you can send these companies a feed (or sometimes an excel file). You’ll probably need to ask your website company for help with this. Note that you need to regularly ensure your products are in stock if you advertise through these methods or your account may be paused or even deleted.

Note that local searches continue to do well, in fact in all the searches I’ve done today K&L Wines has been well featured. They are doing an excellent job with Google Adwords, Local Search, and Shopping so I’ll dig into this company’s internet marketing a little more in a future post.

Lastly a “what the…!”. I stumbled across this while compiling these videos – “topless woman robs wine shop“! And no she ain’t pretty.

What else do you see for wine searches in your local search?

EDIT: Google will automatically include Google Maps results if it thinks that local business results are relevant, or you have included an indicator (like a town) that suggests you want local results. If you haven’t used an indicator it will use something call “your IP address” which tells it which “internet server” is closest to you. Jargon I know but the key thing to remember is sometimes it will be a nonsensical result! This is because Google will be given an IP address from outside your local area – especially if you use AOL. AOL routes all its traffic from around the States through Virginia, so your local results will most likely be Virginian even if you live in California…

Related posts:

1. Local Wine Stores on Local Search: the Top 10 Things You Can Do
2. Local SEO and Wine Stores in 2011: an Update of the Top 10 tasks
3. How to Find Local Wine Customers: Local PPC

• a wine drinker type, called the Experimenter, who wanted to seek out information about wine niches and give them a try
• wine retailer experts who had all the information the fellow above wanted about particular wine niches that the retailer was passionate about
• how the new venture would connect the two using the internet to sell the retailers’ wine directly to these wine consumers

I then alluded to all sorts of problems not the least of which was that snooth had just launched and did something similar. So in this post I talk about why I never took my new venture past the test stage.

In essence there are all sorts of advantages a local retailer has compared to a national online retailer.

But the key reason was simply freight cost. Here’s the longer explanation…

There is a huge difference in physical and digital distribution.

Digital distribution requires very cheap internet bandwidth. Physical distribution requires packing and freight. So I disagree with people who talk of the inevitableness of internet taking over the physical retail sector. The obvious cost advantages in distribution are just not there.

Let’s take the wine industry. The winery and national wholesalers deal with pallets, layers and cases of wine. It costs about the same to send one bottle of wine across the States as it does to send one case. In fact if you have to break a case from a pallet and then take a bottle from the case then it arguably costs a large operation even more to sell a single bottle than a case.

Here’s what the Economist magazine said in an eCommerce Special Report (Feb 24, 2000) in a section called Distribution Dilemmas,

Distribution Dilemmas

“… two things soon became clear. One was that shipping costs were (and remain) one of the biggest deterrents for consumers considering online purchases of physical products. The second was that traditional warehouse and distribution centres were not well suited to the business of e-commerce fulfilment: if it is to work properly, it needs newly designed systems.

Both these things have combined to undermine some of the economic advantages of online shopping.

Perhaps this should not have come as a surprise. Physical shoppers, after all, handle their own order fulfilment, by choosing the goods and paying for them at the check-out, as well as their own delivery, by personally taking them home. And they do all this at their own expense, in both time and money. Merely to replicate this system efficiently, down to the individual consumer, is demanding enough; financing it, whether by absorbing the cost or by adding it to the bill, makes iteven harder. It might have been better had e-commerce firms given more attention to this end of their business first.

Ironically, the delivery problems encountered by pure plays were one of the things that led many traditional retailers to assume that they could do better. Ironically because, here as elsewhere, many quickly found that their own distribution systems, geared to moving goods on pallets from warehouses to shops, proved a disadvantage, not a benefit.

Wal-Mart, for example, has the most highly praised distribution systemin the world: even the tyre pressures of its lorries are calibrated so that, when fully laden with pallets, the vehicles will be at exactly the right height for the unloading docks at Wal-Mart stores. But such a system is unable to cope with individual orders that have to be delivered to people’s homes. So Wal-Mart has had to outsource its website distribution to two rivals…”

The Lesson from Online Grocery

A year later the Economist (25 June, 2001) reports on a UK supermarket’s entry into the States using internet retailing in an article called The Lesson from Online Grocery,

“Tesco’s chief executive, Terry Leahy, says that by using his company’s distribution model he expects the American joint venture to be operating profitably by the end of next year. While Tesco’s distribution methods may, with hindsight, be seen as a clever way to enter a small and uncertain new market, dedicated warehouses may ultimately be more efficient. But it depends on the numbers and geography. Tesco officials have said that before it makes commercial sense, a dedicated warehouse needs to receive about 10,000 online grocery orders a week from its delivery area. At present, there are rarely enough people in one area ordering their groceries by computer to justify that. But in time there might be. So, as with many dotcom ideas, the pioneers of online grocery may simply have been way ahead of their time.”

Actually they weren’t. Peapod struggled, Webvan went bankrupt, and Tesco sold out of the above operation in 2006.

I hear mixed results about wine.com‘s profitability. I imagine it faces a similar conundrum. It needs about 10,000 (maybe fewer?) online orders per week from its delivery area to justify a dedicated warehouse (I think they have 10 warehouses across the country?). Wine.com and the national online retailers assume that their most accessible population is the US population less children, teetotalers etc.

In fact its accessible population are those within 15-25 miles from their warehouse based off the online grocery model, not 300 million. Perhaps 1 million if they’re lucky, more likely about 50,000 (2500 to 5,000+ people per square mile) depending on the county.

Santa’s Helpers

So if you’re going to only sell locally, and the population isn’t numerous enough to justify a dedicated warehouse, what do you do? Open up a retail store of course.

The Economist again (May 13th 2004), in an article called Santa’s Helpers,

“Lots of consumers clearly see useful connections between the online and offline worlds. Many of the big retailers with websites, such as Circuit City and Sears, offer the option of picking up the goods in their shops. This may seem old-fashioned, but it is surprisingly popular.

That could be because people can’t or don’t want to wait for a delivery van to show up, or they are in a hurry, or they don’t want to bother with a salesperson, or they know they can return what they buy if it goes wrong, or they just want to save on the delivery charge, especially if it is something heavy.

At Sears, 40% of online sales (excluding garments) are now picked up in store.”

In a previous post I talked about Macy’s CEO saying $1 of online sales drives $5.70 of offline sales. Most consumers want the convenience and information of a website, but don’t want to wait for delivery, and do want the trust of a local store.

So let’s go over the pros and cons of online eCommerce in the wine retail industry.

Advantages of Selling Wine Online

• You can sell all over the world at any time to of they day.
• It’s more convenient for time poor consumers who don’t want to drive, find a park, walk to the store, ask for product information, and wait in checkout line.
• The internet and retailer websites can provide a vast array of content (reviews, ratings, recommendations) as well as advanced sorting and screening and even virtual wine cellars.
• Sophisticated direct marketing can be conducted using databases and purchase history. This can lead to more repeat custom.
• For some industries there are lower distribution costs e.g. music, newspapers, DVDs. Sometimes a wholesaler can be avoided like in the case of Dell Computers. With wine in the US this advantage is not as apparent.

Disadvantages of Selling Wine Online

• Consumers do not have the instant gratification of possessing (and soon drinking) the wine. The mail order industry has been limited to about 3% of total retail sales in the US. Internet only, or pure play retailers, probably face the same issue.
• Many like the ambience of a fine wine store and find it integral to the shopping experience. Sending single bottles of wine can be very expensive from a order processing, packing and shipping perspective. When a consumer “picks up” they are in effect using packing and shipping themselves at their cost of time and petrol. So retail stores may actually be the most cost effective way to get a wine from the winery on one side of the world to a wine drinker in the middle of New York.
• Some people enjoy going out to shop. Men often joke about women being addicted to shopping when in fact some of us in a fine wine store can be just as bad. The actual purchase of shoes (or wine) is only one part of the shopping experience where as diversion from the routine of daily life, exploration of trends etc can be more important.
• Search engine result pages and poor websites can be confusing and frustrating rather than a seamless simple process that they should be.
• Some consumers still have concerns about using their credit card (which they shouldn’t be) and giving their personal details online (which is perhaps more reasonable).

Credit to that most ardent of internet critics, Bert Rosenbloom of Philadelphia in his Marketing Channels book for some of the above.

In Summary

If you’re selling a digital product such as music or have a low mail and handling cost product then an internet only business could well be very profitable (heck just look at Amazon with books and Apple with music).

If freight and handling are a significant cost then the internet will be a means to pre-sell the product with the actual sale more likely being made in-store rather than online. And I believe this applies to the wine retail industry.

The exception is case lots of wine which have sufficient margin to cover freight costs and lower handling costs – but still suffer many of the disadvantages listed above.

So that’s why I am a strong advocate of local wine retailers selling wine online.

And why I don’t think there is a business case for a long tail national wine online retailer.

What are your thoughts?

Related posts:

1. Local Retailers Selling Wine Online have a Seriously Big Advantage
2. Local Wine Stores on Local Search: the Top 10 Things You Can Do
3. Your local retail advantage will get even bigger: twitter

The venture I planned to set up would connect this group of wine drinkers with specialist fine wine stores in the States (and around the world).

The Long Tail Wine New Venture

Many fine wines stores have particular niches that the store owners love. This expertise comes through in the knowledge they have when speaking to customers and the depth of range in a particular wine niche. It may be Sonoma Valley Merlot or Burgundy Côte de Nuits, Australian Mornington Peninsula Pinot Noir or Italian Montepulciano d’Abruzzo.

That has got to be one of my favorite words – montepulciano – just rolls off the tongue. Anyhow back to the venture…

These fine wine stores not only stock a great range but the fine wine store owners can wax lyrically about there particular passion for hours to customers. That they are unwilling to write this down is a tragedy for all those Experimentor wine drinkers I outlined in the previous post. They love and want this information, and would love to explore the 100s of different wine niches from around the world.

My new venture would have connected these wine experts to those wine lovers.

Connecting Wine Retailers to Wine Lovers

Although fine wine store owners are experts at wine, no one expects them to be experts at selling wine online. My venture would have helped them create a wine eCommerce website or preferably taken information from (known as a ‘feed’) their existing websites and put this into a database through using the internet.

Then, using my skills in wine internet marketing, I would have found those Experimenters in the middle of their (fruitless) search for wine niche information. I would have directed them to a wine portal of fine wine stores so they could purchase the niche wine online effortlessly.

So that’s the gist of the idea. If you want to see it in play check out snooth.com . Nice work by Philip and his team. They have nicely handled the shipping compliance issue that was causing me a few headaches.

Let’s go into the long tail of wine and you can see why it’s so attractive.

All the wine niches and the long tail

The problem of the long tail is that you have to start at the short head.

Let’s use songs as an illustration. If you click on the image it should open a larger version. Rhapsody (sort of an iTunes) gave Chris Anderson all its data on music purchase. The long tail is the yellow section, the short head is the red/yellow dotted section.

Long tail songs

You can see that the most popular music quickly tapers off to unpopular music. The music on the left is the mainstream hits. The music to the right becomes increasingly niche and unavailable from regular bricks and mortar stores such as Wall Mart.

Now let’s look at Britney Spears – click on the image below if you need to.

It tells us that Britney Spears fans use internet sites “recommendation engines” to explore music that is similar to Britney. They go from the the 340th most popular song, to the 1010th to the 5153rd, to the 32,195th most popular song (by a group call “The Selecter”). Who knows and cares who they are. Well, actually some Britney fans do. And they appreciate this service to work their way from the short head of Britney type music to the long tail of music similar to Britney.

(Diagrams above: From Chris Anderson in his thelongtail.com blog post Microstructure in the long tail.)

So in our industry’s case they might start with Yellow Tail pinot noir. Realize what a really bad choice this is and check out a Napa Robert Modavi, then move to an Oregon Erath Estate before choosing to purchase a Wooing Tree Central Otago Pinot Noir 2007. The Experimenter wine drinkers read that: it was a new winery, had had a remarkable first few years, won 3 trophies, numerous gold medals, 5 star ratings, and praise from wine writers worldwide. It also came from the end of the earth (well, Cromwell actually).

The Experimenter may do this on one website, as in the Britney case above, or many, using Google to light the way through the wine advocate, wine spectator, wine blogs, wine.com, your store …

It may also happen in a slightly different way. The Experimentor may start with Pinot Noir then move to New Zealand Pinot Noir, then Central Otago Pinot Noir before choosing Wooing Tree Central Otago Pinot Noir 2007. This concept is known as the Search Continuim where the search term gets more exact until it reads something like “buy Brand X Region Y Varietal Z Year”. Which is also referred to in internet marketing circles as a ‘buy word’ because it will convert well and is worth bidding on in Adwords.

Here’s how Chris puts it about music,

“It’s possible, for example, to be the most popular drum-and-bass artist at the very head of the drum-and-bass popularity curve, but that doesn’t mean that you’re about to knock 50 Cent off his top-ten perch. Music is made up of thousands of niche micromarkets, miniature ecosystems that, when smooshed together into an overall ranking, look like one Long Tail. But look closer and each has its own head and tail.”

Here’s a graphical representation of this. Note all the niche markets in the long tail – each it’s own short head and long tail.

(Diagram above and quote from the same post Microstructure in the long tail)

The Plan

In effect I was aiming to aggregate all these long tails of niche wines and offer them to this particular wine drinker segment. The sale would still go to the wine retailer so I didn’t have to carry stock, worry about shipping compliance law or customer service. I would get a commission on this purchase.

The Test and the Issues

I launched a JV business with a local wine retailer to test the concept. It used a niche I know well – Central Otago Pinot Noir.

But I ran into some serious issues. The good news is that I started MyLocalWineStore.com as a result of those issues, the bad news is I don’t see a good business case for national internet “pure play” wine retailers.

More of that in my next post.

Have you had success with the long tail of wine? I’m truly interested, please comment below.

Related posts:

1. Selling Wine Online: The Long Tail of Wine- an opportunity?
2. Plan to start a long tail online wine store?
3. Tapping into the Long Tail of Wine Bloggers