Online wine market has ‘significant growth opportunity’

The burgeoning online wine market has a chance to significantly grow its share of the wine retail sector according to the founder of Wine.com.

As reported by WineBusiness.com, Michael Osborn, Wine.com’s founder, believes e-commerce is poised for future growth as consumer buying habits have permanently shifted due to the pandemic

While online wine sales in the US still only account for a fraction of the country’s US$50 billion annual off-trade sales, Osborn predicts that online sales will continue to steal market share from bricks and mortar stores.

“We could not have the SKU count we have without the customers telling us what they want. I used to think having 3,000 to 4,000 wines would be sufficient, but now we’re past 50,000,” Osborn said during an online presentation for the University of California, Davis.

Another way Wine.com is looking to grow this year is by boosting its spirits offering in a bid to tap into a US$45 billion market for off-trade spirits sales. “Like wine, there are plenty of spirits producers who have really compelling stories to tell,” Osborn said.

To prepare the company for future growth, Osborn has doubled Wine.com’s marketing budget and plans to expand its warehouse facilities this year.

Wine.com boasts an offering of over 50,000 wines from 8,000 producers, delivering the wines to customers via a network of 400 wholesalers.

With a customer base of over 700,000, Wine.com had 46 million visits in 2020. The website made US$329 million in revenues last year, up 119% on 2019.

For the most recent quarter, ending on 31 December 2020, the website’s revenue was US$111 million, up 64% on the previous year.

Levels of customer engagement on the site were high, with shoppers buying wine from 198 different grape varieties from 52 regions around the world.

The sales split between domestic and imported wines is pretty even, with domestic sales accounting for 48% of sales and imported wines 52%.

Millennials and Gen Z consumers represented 44% of new Wine.com customers last year, and are the fastest-growing generation of new users.

Millennials and Gen Z customers also had the highest average selling price per bottle of any age group, at $28.50, with Baby Boomers lagging behind at $25.80. As reported by Wine Business.com, Boomers still account for the highest average value per wine order.

Osborn puts the site’s impressive growth down to an increase in consumer awareness about online wine platforms; a trend he believes to be a “game-changer”.

Being able to offer customers a speedy delivery “is paramount”, according to Osborn, with half of Wine.com’s customer orders receiving next day delivery.

With a background in software development, Osborn founded Wine.com in 1998 aged 29, though the site was originally called ‘eVineyard’ when it launched.

Sharing a similar goal to Vivino, Osborn created the online wine platform to help consumers that felt overwhelmed when faced with a wall of wine in a shop.

“This is why we exist. With a computer database, there is so much more information and opportunity to tell the consumer about a wine.

“There is so much information missing from the store environment, and with limited shelf space, it limits the number of wines available,” Osborn said during the presentation.

Like Vivino, Wine.com wants to provide customers with a curated shopping experience, and gives its producer partners the chance to tell their stories on the site, which translate into sales.

Its Picked by Wine.com function is a wine club subscription service based on a customer’s personal preferences and tastes.

The site branched out into online tasting events last year, with the likes of Laura Catena and Jean-Charles Boisset, which have proved popular.

Attracting the most attention are its celebrity wine tastings where customers can sip along with the stars. The site hosted 55 tastings last year, including celebrity wine tastings with John Legend, Sarah Jessica Parker and Cameron Diaz.