Amazaon, WSJ Try New Alcoholic Revenue Streams: Selling Wine
This story was written by Staci D. Kramer.
The Wall Street Journal has a wine franchise in columnists Dorothy J. Gaiter and John Brecher that's hard to match on the content side. Now Dow Jones (NYSE: NWS) hopes to capitalize on the combination of that reputation and its affluent audience by offering WSJwine, a direct-to-home wine service. Pairing with Direct Wines, WSJwine launched today promising a wide range of choices but without any actual connection to WSJ's wine journalism. In fact, it's not obviously possible to get from WSJwine.com to WSJ.com. The first bottle I found was a 2003 Roche Lacour Cremant de Limoux for $19.99 ($219.99 a case). Trying to buy a bottle took me right into an error page. Enthusiasts can join The Discovery Club with a 12-bottle case for $69.99, $120 off usual prices, plus tax and $20 shipping. That includes a free binder for labels and notesand a wine-tasking kit in a wooden box. Every three months, members will get a new case for $140 plus shipping and tax unless they opt out. Oh, and I finally figured out the error pages: unless you pick a state and swear to being at least 21, you can't order anything.
Speaking of competition, Amazon (NSDQ: AMZN) is said to be on the verge of launching its own wine store although so far the options when you enter "wine" in the search engine run to books, vinegar and gum. (This search brought to one of those fascinating serendipities on Amazon: customers who bought a six-pack of Wish Bone Fat Free Red Wine Vinaigrette Dressing also bought Wish Bone Fat Free Ranch Salad Dressing, Kellogg's Apple-Cinnamon Nutri-Grain Bars and two gel-filled king-sized Dream Supreme pillows. The pillows would make a lot more sense with a six-pack of wine.) The e-commerce company hasn't confirmed this yet but wine industry insiders are talking about it. Reuters reports that the wine will qualify for Amazon's discount shipping program but exactly where it can be shipped and how is part of the legal crazy quilt that cost Amazon when it tried wine in the past. This time, Amazon is working with Napa's New Vine Logistics for wine fulfillment.
How much can the Journal and Amazon make with this? Barbara Insel, president of Stonebridge Research Group, told Reuters total U.S. wine sales were between $30-$32 billion in 2007 with $2.8 billion sold through wine clubs, tasting rooms, etc. Of that, only some 7 percent comes from e-commerce now, making it a potential growth area. It's not easy to project from the outside, especially since partners and fulfillment houses are involved and because the laws vary so much from state to state. The membershipsa different kind of paid contentcould be the best bet. Competition is stiff but WSJ has the brand and Amazon has both brand and volume.
By Staci D. Kramer