In its second-largest acquisition, Amazon buys the company for $970 million.
Selling wine online to a mass audience raises branding issues for sellers.
One reason online wine retailers have not been able to maintain their business is that wine buying is not a good fit with the mass market, Jonahtan Gaw, research manager at IDC, tells Internet Retailer.
Gaw says wine distributors who are selling a popular product would rather have it sold by wine shops they have relationships with or top restaurants, where it will receive the kind of presentation the vintner thinks it deserves, rather than to consumers online. “The wine maker that wants to market a hot wine has no control over how it is sold. It could be sold next to a brand sold at grocery stores,” he says.
Wineries, which tend to be small businesses, focus on selling products to certain distributors, restaurants and direct to consumers who may visit or regularly buy from a winery. While many small wineries have their own web sites, Winetasting.com is giving small wineries in California an e-commerce forum in which to sell premium wines online. Rather than selling to the masses, Winetasting.com appeals to targeted wine buyers. It pools the assets of the group of vineyards to cross market products and gain new customers for the different wineries online.
The initial players in the online win segment had a difficult time making a go of it because online wine is not a mass market, Gaw says. “The wine segment is not a huge market when you look at the number of vineyards relative to the greater business world,” says Gaw. “There are few potential customers so it’s about developing relationships with those existing customers.”