Facebook  Twitter  Linked In  You Tube  GooglePlus  Pinterest

Where Have the Flash Sale Wine Sites Gone?

expert-editorial

This holiday season will mark the near end of the Flash Sale Wine Sites. What you say? How is this possible? Yes, this is possible, probable, and very much happening. Gone are the days where you would eagerly wait near your inbox looking for the best wine at the best price. Gone are the days where you would boast at parties that your Lot 18 invite is like a VIP tour of Augusta. They are all gone, and here is why.

In the beginning, at Sam’s, we had the original wine flash site long before the term was even coined. It began with a winter vacation in Mexico where I was fortunate enough to share a hot tub with Amazon Founder, Jeff Bezos. I sat in the scalding water much longer than needed just to get one nugget of knowledge from him on why Amazon was so successful. He told me that web traffic peaked between 11a-4p, and that his sales mirrored that usage. Ding…Ding..Ding.

When I returned to Sam’s post vacation, we created Lunch Crush. Lunch Crush launched in 2000 and regularly sold 500 cases of wine a day via an email blast that expired at 4pm daily. So much was the fervor that we had customers call and beg for the sale to be extended to them because work email did not allow for wine websites.

That was then…

Fast forward to the recent past. The web is littered with retooled, closed, pivoted flash wine sites including Lot 18, Winestyr, Woot Wine and others. Here is the problem with the wine flash sale site.

  1. The customer that screamed the deal and the value they were getting was loud and proud. They could not wait to share the site, deal, price, and availability of the wine they just bought. The problem with that is that the customer could not drink the wine fast enough to support SSS (same store sales), or in this case, continued customer growth. They would buy and buy and then realize that the cellar was loaded, and if they consumed a bottle a day until the Cubs won the World Series, they would still not finish all the wine they purchased. Thus, they stopped buying.
  2. With the customer over indexing on wine, the website was forced to always be getting new customers. The customer acquisition rate was expensive, and there was never a lull or a plateau where costs became fixed, either marketing or otherwise. They always needed to be hunting for new wine drinkers. That is expensive and difficult.
  3. Email open rate is now at historic lows. When we would send an email, the open rate was 18%. That was industry leading for the wine world, now the open rate is South of 3%. That is including double-opt in customers. Less opens equals less purchases.
  4. Google, the #1 free email provider, has introduced an algorithm that pushes promotional emails into a separate folder. Unless you are diligent in scanning all your email folders it is incredibly easy to miss the all important promo emails about a “Super Cabernet under $30 dollars”.
  5. The rate of new Flash Sites did not mirror the rate of engaged wine drinkers. More sites than drinker’s equals fewer shoppers for all sites as a whole. This equated to lower average cart.
  6. The flash sites were run by retailers that often used the medium to move old goods, supplier close outs, or private label wines with high gross margin. When the retailer lost the consumers trust, they lost the consumers sales as well.

So here we are, nearly 2015 and the web is still the most viable way to communicate, sell, and distribute libations.

Selling small batch, localized, quality driven wines/ spirits and craft beers will lead the new charge. Consumer driven reviews and websites will move more goods than wine.com ever did. Social communities where your peers, friends, and networks are discussing a brand will move the needle more than K and L ever could.

We are living in a world where the customer has all the power and the retailer is becoming beholden to the bottom up way of selling and buying.

The Flash Sale Wine site needs to morph into a smaller, less megaphoned version of themselves to appeal to localized groups on levels other than price. When that happens, the world will be aligned again.

Brian RosenExpert Editorial
by Brian RosenRosen Retail Method

Rosen Retail for Alcohol Beverage offers support to retailers and suppliers alike, having created Supplier Boot Camp and Retailer Boot Camp and other award-winning programs that increase gross margin for retailers and cases sold for suppliers. Brian Rosen can be reached at brian@briandrosen.com or twitter @rosenretail.

3 Comments on "Where Have the Flash Sale Wine Sites Gone?"

Trackback | Comments RSS Feed

  1. invino says:

    We are the pioneer in the private sale model (launched well before Lot18 was ever conceived). Since people lazily lump us into flash sales, i’ll play along… 2014 will be our best year yet and we continue to have throngs of loyal followers (oh by the way we are profitable….)

    Our biggest competitor (who shall remain nameless) sells more wine than anyone else online, so not sure exactly where you get your facts, but they are just not true….

    Just because Lot18 cannot run a business and Amazon decided to make Woot a shell of its former self doesn’t mean the rest aren’t doing well.

    In fact, our growth outpaces the industry average, so not exactly sure where you forge your opinions, but you keep espousing that narrative. Maybe somebody is listening….

  2. Brian Rosen says:

    Thank you for the comment.
    At one time there was well over 100 functioning Flash Sites for wine. They ran a like path as We Deal, Living Social and others. The reality is that the online world keeps evolving/ changing and the 100% flash sites that exist on price alone are all but dead.
    My data is both IRI and TD subscription based.
    Then you can factor in the human side as well. People can only drink so much and the lure of “good deal” is passe. When you buy more than you can consume you stop buying. It is up to the site to keep acquiring new shoppers, therefore the marketing costs continue to maintain a high amount. There is depletion of customers as new ones come on board. Traditional websites or brick and mortar stores see a leveling off of customer acquisition costs as the brand matures whereas flash sites do not.
    The model is long term flawed and short term awesome.
    My insights come from not only the above mentioned data sources but my time as Partner at PricewaterhouseCoopers in performance improvement.
    Our team at Rosen Retail commends your success and hope it continues to proliferate but we are surely not pontificating on the subject. Every trend in the alcohol beverage space points towards hyper-local, personalized, and unique selection. Price is far down that list.
    Have a wonderful and profitable holiday season

  3. Joseph Schmoe says:

    Your point is flash wine sites are just draining business from brick and mortar and fixed wine sites with catalogs from retailers. That does not mean they will go away, just that they will consolidate into fewer players and share the gradual growth of wine consumption.

    They also benefited from a wine glut that is diminishing on the production side.

    The headline is hysterical, the content true but exaggerated. All things change.

    As the Millenials age and increase their disposable income, there will continue to be growth in the market, but their trend is to drink wine in social settings out of their currently small apartments.

    Loosing the boomers will change the market, but it remains to be seen if increased growth at the low to mid- price points will continue improvement for the decades to come.

    Flash sites will be around whenever there is excess wine to sell.

Post a Comment