Things could not have gone much better for Wine.com in 2019. This year, they expect more customer experience improvements, a boost from the Golden State and an effort to keep a new generation of wine connoisseurs engaged.
By all accounts, including industry bible Wine Enthusiast, the wine of the year for 2019 was the Taylor Fladgate Quinta de Vargellas Vinha Velha 2017. That’s $259 per bottle, if you’re keeping score. And the wine retailer of the year? It wasn’t one of the mega stores that have popped up all over the country, or a little “bougie boutique” in a suburb. The 2019 wine retailer of the year was online – specifically, it was a good year for Wine.com.
Wine.com topped $150 million in revenue last year, a $20 million year-to-year bounce and the largest gain in its 15-year history. Those results were helped by 60 percent revenue growth over Cyber Weekend, high net promoter scores and improvements to the customer experience that kept consumers coming back for more outside of holidays and heavy promotional periods.
CEO Rich Bergsund sees its vintage year leading to an even better 2020 as it continues to bring more consumers to the site and find more ways to keep them engaged.
“Our value proposition is to help people discover this incredible world of wine. And to do that, you have to feel confident about it. And so we have built the world’s largest wine store,” said Bergsund in an interview with PYMNTS. “It has every variety of wine from every part of the world. We offer many critically acclaimed wines, at price points from $6 to $6,000, for every kind of customer.
“But we don’t want to be a gatekeeper,” he added. “There are gatekeepers for economic reasons all over the world of online retail. We are a gateway, not a gatekeeper.”
The Wine.com business model aims to educate and then convert. Bergsund is aware that it’s sales, not education, that ultimately drives revenue. “Our industry is seeking to attract the next generation of consumers,” he noted. “We’re seeing signs that a modern retail approach – with online and mobile channels, deep content, live chat sommeliers and convenient delivery – is appealing to all ages and levels of wine sophistication.”
The company’s growth has been consistent with the overall online retail category. First, its subscription business, called StewardShip, grew 24 percent in 2019, comprising more than half of company revenue. One-third of Wine.com’s revenue came from mobile devices, growing 30 percent in 2019. Revenue from the company’s mobile app grew 60 percent. Millennial purchases grew 36 percent in 2019, which Bergsund sees as the key to what he calls the next generation of wine drinkers.
Millennials are leading a premium trend for wine. According to Bergsund’s data, 21 percent of Wine.com revenue comes from consumers aged 42 years or younger. That segment spends about $32 per bottle, but their total order size is smaller than other segments.
Millennials are also leading a trend in high-end spirits, which will be a focus for 2020. Forty-five percent of spirits customers are millennials, with an average spirit category spend of $50 per bottle.
“Our opportunity is to introduce the next generation of wine enthusiasts to the category in a way that’s better than the old way of buying wine,” Bergsund said. “I mean, you could walk up to a huge wall of wine at a megastore, but I don’t think you will have the guidance or confidence that we offer in shifting from offline to online.”
Less than 3 percent of total U.S. wine sales are sold online currently. Bergsund’s goal is to grow that to 10 -15 percent. For 2020, the company will aim to attract customers in three new ways: a wine-of-the-month club, more events at wineries and an increase of paid social media.
“The best marketing is offering a great experience and a good customer value proposition,” he pointed out. “It all starts with that, and then telling people about that, and getting more of them to give it a try. It’s about building this value proposition that people are really appreciating – that is what creates lifetime value.”
For 2020, Bergsund is focusing on opening up the state of California to online liquor sales. The company’s growth has taken place so far without the state that holds the most wineries, not to mention roughly 39 million people. A few weeks ago, Wine.com started selling in California.
Bergsund likes to tell the story of a panicked customer from San Francisco who called just two weeks ago. She needed a bottle of Screaming Eagle cabernet for her husband’s birthday party that night. No one had it in stock, but Wine.com had a bottle in its Oakland warehouse. The customer experience manager at Wine.com drove from the San Francisco headquarters to the warehouse, drove back to San Francisco and delivered a bottle of Screaming Eagle to one surprised and excited customer.
Bergsund doesn’t expect all of his employees to be as reactive. But for a $1,000 bottle of wine, some things are worth the trouble.