by Tim Elliott on October 28, 2009
It’s been a long time since I’ve posted anything here so I thought I would start back with a big story that broke last Friday. As you have no doubt seen elsewhere, Amazon has put their wine program on hold. While I’m disappointed with this turn of events, I’m not that surprised given the state of the economy and the collapse of New Vine Logistics, Amazon’s wine logistics partner.
Coverage in the wine blogosphere has ranged from somewhat optimistic to outraged to, well, depressed. I have a somewhat different view on this since Amazon is really not saying that much outside of the fact that they have discontinued their wine shipping program they had been testing for the past several months. In the email many of us received from Amazon on Friday, they never said they were pulling out of exploring the wine industry, just that they would not be resuming their test program. This leaves the interpretation open to the commentator and most everyone has concluded Amazon is exiting the wine industry.
I disagree with this opinion and think that Amazon has simply pushed the pause button. At some point in the next 18 to 24 months they will again look to establish some sort of wine program because many of their current customers want to buy wine from them. The simultaneous economic meltdown and collapse of their logistics partner just means they can’t figure out how to profitably sell wine within the current environment. A lot can change in the future from IBG’s revitalization of New Vine’s business to changes in legislation that will make wine an easier product for Amazon to sell.
Mark my words; Amazon will change the wine business. They will just not do so in 2009 or 2010 as most of us thought. Once the economic and regulatory situation becomes more favorable, Amazon will un-pause their program and will figure out a way to make money doing so.
by Tim Elliott on June 1, 2009
News broke yesterday afternoon on Twitter that New Vine Logistics was shut down. Locks on doors kind of stuff; most employees out of work. Not a good turn of events for what looked like the company to watch when the economy bounced back and consumers regularly bought wines again over $30 a bottle. They were the logistics partner for Amazon.com after-all; how could this happen?
I’m sure we will see a lot of information come to light in coming days but I was not as surprised about the result here, just the rapid nature of New Vine’s demise without much warning to their customers. If you are a small to medium winery 100% bought into New Vine and had a club shipment this month, you have a serious problem to solve.
But I think that most wineries will weather this storm and find alternative shippers or take this task back in house. For few this will be the death blow as some have postulated. There will be some lasting scars from this turn of events that will effect the future of direct wine shipments that I would like to spend most of this post discussing. But first, triage.
If you are a winery selling a significant amount of wine via New Vine, take a deep breath. The sky is not falling even if it looks that way right now. There are a number of questions that will be answered in the coming days. I would heed Mike Duffy’s advice and send an email to your customers telling them you are waiting to hear about next steps and are working to find alternative vendors (WTN Services even offered a press release today looking to help you out but I’d also call WorldShipNet; many other smaller outfits will call you shortly if they haven’t already). If you have already run credit cards for a club shipment, I would wait until the end of the week before issuing credits. We’ll know a lot more then.
The future of direct wine shipping is not at risk here; this is just a bump in the road. Although there are a lot of moving parts and regulations to deal with, the wine consumer of the future will buy a lot of wine direct. I expect to see a move to online purchasing as Amazon gets going. And, yes, I think they are going to make wine.amazon.com a destination site yet this year. Either they will buy New Vine this week or more likely hire the people they need to do the logistics themselves.
It appears that New Vine fell victim to this economy, their optimism that outran their headlights and Amazon’s due diligence. In a “make or buy” decision, the folks in Seattle chose to make; probably for very good reasons. The direct shipping of wine to consumers is not going away; New Vine appears to be. But we don’t know all the facts yet. Post what you do know in the comments.
Interesting times, these… to say the least.
Update 6/2/09: Many questions answered in a post by Lewis Perdue | DEAD! – New Vine Withers After Amazon Bolts & Investors Pull Plug
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