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Wine.com investors are finally tapped out
After investing more than $200 million, the owners of Wine.com sell out to eVineyard.
It seems like all of the ideas for selling on the web that generated wild enthusiasm two years ago are coming up bust. First garden supplies, then toys, now wine.
Last month, online wine retailer eVineyard acquired the ailing Wine.com from Sand Hill Capital II L.P. The acquisition leaves only eVineyard and Winetasting.com (see p. 10) in a market that less than a year ago also hosted wineshopper.com, drinks.com, liquor.com, send.com and others.
Wine.com, which had acquired Wineshopper last year, laid off 160 of 245 employees in April. Shoppers going to wine.com are redirected to eVineyard.com. EVineyard is using both brand names.
EVineyard’s Vice President and Chief Marketing Officer Brett Lauter says the financial problems at Wine.com gave eVineyard an opportunity to acquire a strong wine-buying customer base at a very low cost: “Wine.com spent more than $200 million in investment capital building their brand and growing their business and we spent in the seven-figure range to get those people who were their customers,” he says. Wine.com has a customer base of 400,000 to which eVineyard will market. Private investors as well as iTech Partners, Angel Investors, Osprey Venture Capital, and Bear Creek Corp. have invested more than $20 million in eVineyard.
eVineyard holds liquor licenses in 27 states, which allow it to ship wine to customers in those states. It does not maintain inventory; rather it has arrangements with wholesalers in each state. The company sells gift products in all 50 states. By contrast, Wine.com did not hold any liquor licenses. It had arrangements with wholesalers and retailers in 41 states and relied on them to fulfill orders.
The number of employees at eVineyard will increase from its current staff of 50 with the addition of people in customer service and operations.
Lesley Berglund, president and CEO of Winetasting.com, which runs a cooperative web site featuring products from 50 partner wineries, says there’s plenty of room for both players. “EVineyard is like a big front door where people start learning about wines and buying,” Berglund says. “Once consumers get into the wine-buying process, those who become enthusiasts like to find the source, or the winery. And we provide the source.”
The average ticket for eVineyard is about $100, while Winetasting’s average is more than $300.