By use case
By business type
E-commerce for Microsoft Dynamics
E-commerce for SAP
Take your web store to the next level
Discover our additional services and add-ons, from shipping to PIM and marketing.
E-commerce by industry, E-commerce trends
The food and beverage sector has found its sweet spot when it comes to maximizing the potential of digital and of online sales. With more online grocers joining and succeeding in the market (and the Amazon Effect making the e-commerce landscape even more competitive), it seems due time for wineries to follow suit. However, with regulatory and logistical challenges still posing a big obstacle for wine e-commerce and digitization across the industry, this has largely not yet been the case.
According to Beverage Daily, “if online grocery sales continue growing as projected while alcohol retailers underperform at the same rate [they have been, businesses in the wine industry] could lose out on nearly $4B a year in alcohol sales by 2022.”
An e-commerce solution, along with the embracing of digital disruptors and technological innovation in the wine industry, maybe a panacea for wineries as well as for wine manufacturers and distributors. The question that remains is: how can these businesses tap this digital opportunity, and when will they do so successfully?
To gauge this timeframe for success, let’s first look at what challenges are holding these businesses back (or use the options below to drill down by section):
Want to get a visual, 10,000 foot view of the industry instead? Check out our wine e-commerce infographic here.
In the US, online wine sales account for a lowly 2% of wine sales (only a fraction of what’s being sold in other countries across the globe). Why? Because most wine businesses have not yet figured out how to sell (and fulfill orders) online in a way that’s simple, convenient, and profitable. Given the major hurdles on the path to success, it’s not a surprise that businesses in the wine sector are still adopting wine e-commerce extremely slowly. Here are the leading challenges:
The reasons for investing in digital in the wine industry are numerous. While wine e-commerce is a big part of the equation, there are also wine-centric apps on the rise, D2C sales skyrocketing, and emerging technologies impacting distribution, last-mile delivery logistics, and more.
Here are a few of the most notable opportunities in the industry right now.
Technical innovations across production, sales and delivery, product recommendation and personalization, and consumption are just beginning to take over. Some businesses are testing things like sensors with predictive models to assist vinification and wine aging, algorithms to match customers with products based on their preferences and taste palettes, and packaging innovations including boxed, canned and single-serve formats for wine. Although delivery services centered around getting wine at your doorstep makes up around 40% of the wine industry’s movement toward innovation, it is limited space to make improvements – and only addresses part of the problem.
The obvious next step would be to continue to improve delivery and fulfillment services while keeping our eye on how we can take better advantage of opportunities for disruption in production and personalization. Although there is much room for improvement when it comes to digital innovation, the industry has established the foundation and first steps to embracing technology.
The U.S. is currently the largest market for wine in the world (consuming about 13% of the worldwide supply), which allows the American customer base to significantly impact trends in the industry. In the U.S., wine has a much higher market share compared to other spirits when it comes to online sales, and it’s making wine e-commerce a necessary part of digital strategies for the wine industry rather than just an option.
Emerging technologies continue to improve direct-to-consumer (D2C) sales of wine in order to meet the fast and unrelenting rise of customer demand.
According to a recent Silicon Valley Bank report, the success of the wine industry online will continue to rely heavily on customer-centric approaches. As quoted in the report, “successful wineries 10 years from now will be those that adapted to a different consumer with different values — a customer who uses the internet in increasingly complex and interactive ways… Successful companies will be those that evolve retail strategies away from the winery location as the sole point of experience and find other, scalable means of delivering the experience — and the wine — to consumers where they live.”
This has already been proven true and is already impacting the market. We see disparities in how consumers buy wine online-based whether or not – for example – they live in urban or suburban neighborhoods: the former being more likely to purchase for same-day delivery and the latter more likely to order in-app for in-store pickup. Businesses must be privy to and cater to, customers based on preferences like these in order to fully lock in the opportunity in online sales.
Direct-to-consumer (D2C) sales in the wine industry are through the roof. The D2C wine sale market brought in $3.1 billion in 2017 and is expected to reach $5.2 billion in 2022. Currently, 62% of wineries consider D2C to be their fastest-growing sales channel; in fact, while it makes up less than 10% of total sales, it makes up an estimated 20% of total profit. Across the supply chain, e-commerce has made direct-to-consumer sales an opportunity for organizations to tap (according to our 2020 research roundup):
Download the full whitepaper: The Supply Chain and E-Commerce Essentials Guide for Manufacturers, Distributors and Wholesalers
Why? Because wineries selling direct-to-consumer yield higher profit margins than sales to wholesalers. For small businesses, this opportunity is even more significant. According to the same Silicon Valley Bank report, small wineries’ gross margins are doubled by selling direct-to-consumer.
The D2C trend in the industry shows no sign of slowing any time soon, and will only continue to grow as more businesses emerge and disrupt the market with new ideas and technology.
When it comes to online wine sales, we’re miles from where we could be (especially in the U.S.). Currently, the top 20% of wineries selling through websites are responsible for 90% of revenue flowing through the channel. But this doesn’t mean there is no room for competitors to shake up the game.
In 2019, so few businesses in the wine industry are getting online sales right, that players who are simply participating in wine e-commerce at all are getting a massive piece of the revenue pie. Now imagine your business entered the market with a fool-proof strategy focused on convenience and customer-centricity; a significant piece of that pie could be yours.
Here are some notable industry success stories to learn from:
Your business can be the next success story, or the next cautionary tale, depending on how you approach your digital strategy.
Among the businesses in the wine industry who do have a web store or online presence, many seem to be doing the bare minimum, and it’s obvious. A summary of what the web store experience looks like today is perhaps best summed up by Silicon Valley Bank’s 2018 report:
“Few wineries have an online presence that engages the customer. Sites lack sophisticated, responsive, fully integrated designs and experiences that allow new and returning customers frictionless e-commerce.”
“The opportunity,” says Silicon Valley Bank, “is wide open for a company using online tools to replace the distributor’s sales and marketing role [and using] big data to enhance outreach to consumers and improve sales opportunities.”
For even more insight into how wineries (and the rest of the food and beverage industry) is approaching digital, download our latest trend report.
The benefits of e-commerce for the manufacturing industry
D2C E-Commerce Explained: The Benefits for Manufacturers (and Distributors)
Supply Chain E-Commerce The Essentials Guide for Manufacturers, Distributors and Wholesalers
We will keep you up-to-date on the latest developments.