The Future of Wine Ecommerce and How to Help Merchants Grow

While the pandemic clobbered most industries in 2020, wine sales rebounded fast — fueled partly by growing internet sales as consumers sought safe, socially distanced alternatives to visiting their favorite tasting room or wine bar.

More wine was ordered online in 2020 than ever —a 27% increase from the prior year — with 44% of buyers purchasing wine online for the first time.

In the U.S., the ecommerce share of wine sales went from 0.3% in 2018 to nearly 3% in 2022. While these might seem like modest strides, they speak to a growing trend in direct-to-consumer (DTC) as a popular channel for online wine sales.

Wine is intensely personal. The DTC model, in which wine producers sell directly to end buyers rather than through a retailer, lets consumers connect with far-flung producers and receive personalized recommendations based on their purchase history.

Other advantages to purchasing wine online are convenience, access to a broader selection of wines and the ability to see ratings and reviews from other customers to make informed purchase decisions.

Consequently, industry analysts expect to see online alcohol sales grow by more than 600 percent to exceed $40 billion by 2024. 

Running a wine ecommerce business can be a lucrative venture, and here are some ways to help scale your business.

Ecommerce website platforms provide a full suite of capabilities to create and manage an online storefront, from website building to analytics, payment processing, search engine optimization and more. Here are some must-have features when choosing an ecommerce website platform:

Scalable website builder.

A scalable website builder lets you create and manage a website that can adapt to changes in web traffic. Scalability is crucial because your website will need to support increased user demand without slowing down or crashing as your business grows. You may also need to add more features, pages and content to your website.

Scalable website builders often have features such as:

• Responsive design: The website will function properly on different devices such as smartphones, tablets, and desktop computers.

• Customization: Built-in templates, themes and design tools let you create a website that reflects your brand.

• Custom website domains: Use a proprietary domain name (eg: www.yourbusinessname.com) rather than a subdomain provided by the website builder. This is beneficial for branding and SEO purposes.

• Integration with third-party services: Integrate your website with other software such as email marketing, social media scheduling and CRM systems.

• Ecommerce capabilities: Tools for building an online store, including support for multiple payment gateways, inventory management and shipping options.

• Security features: These can include SSL certificates, which encrypt data transmitted between your website and its visitors, and tools for detecting and preventing cyberattacks.

Robust stock and inventory management.

Ecommerce software can automatically process orders, update inventory levels in real-time and alert you when stock runs low. Machine learning algorithms analyze inventory data to provide increasingly accurate recommendations on optimal inventory levels, minimizing the likelihood of oversells and out-of-stock situations.

The software should also provide a low-code or no-code interface for managing product listings, including updating descriptions, images, and pricing. Overall, ecommerce software streamlines and automates many of the tasks involved in inventory management.

Reliable payment processor system.

Ecommerce platforms typically offer API integrations with various payment processors such as PayPal, Stripe and Square. When choosing a payment processor for your wine ecommerce business, consider the following factors:

• Fees: Make sure to compare the fees charged by different payment processors, including transaction fees, setup fees and monthly fees.

• Payment methods: Consider which payment methods you want to accept, such as credit cards, debit cards and online payment systems like PayPal. Choose a payment processor that offers the payment methods you need.

• Security: Payment security is critical for both you and your customers. Choose a payment processor that uses secure technologies like SSL encryption to protect your transactions and sensitive customer data.

• Integration: Consider how well the payment processor integrates with your website and other software systems, such as your shopping cart, CRM system, and accounting software. Choose a processor that offers seamless integration to make it easier to manage your transactions.

Diverse marketing tools.

You’ll need to use online and offline channels to reach potential customers. While hosting in-person tastings and exhibiting at farmer’s markets are great ways to connect with wine lovers, you’ll need to use digital sales channels, too.

Look out for platforms that offer these digital marketing tools:

• Email marketing: Send newsletters, promotional offers and other updates to your customers.

• Social media marketing: Use platforms like Facebook, Instagram, and Twitter to post organic content and paid ads to attract and engage potential customers.

• Paid advertising: Platforms like Google AdWords and Facebook ads let you reach a targeted audience and drive traffic to your website.

• Affiliate and influencer marketing: Partner with affiliates and influencers in the wine industry to promote your products and earn a flat fee or commission on sales.

• Customer loyalty programs: Offer referral incentives and rewards to encourage repeat business and loyalty.

In-depth reporting.

Robust data analytics provide a window into how your business is performing. You need to know how many people are visiting your website, what percentage of site traffic converts to paying customers and more.

When choosing an ecommerce solution, look out for these data reporting features:

• Sales data: Detailed sales data such as revenue, orders, and average order value help you track and understand your business performance.

• Customer data: Quantitative and qualitative data such as demographics, location and purchase history help you segment customers, serve better-targeted ads and provide personalized offers.

• Website analytics: Key metrics including page views, unique visitors and bounce rate provide insight into how visitors interact with your website.

• Inventory data: Monitoring stock levels, product performance, and restock alerts help you manage your inventory more effectively.

• Customizable reports: Choose a platform that lets you customize and create reports or dashboards so you can focus on the data that is most relevant to your business.

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WineDirect, a BigCommerce partner, is the leader in DTC services for wineries, including ecommerce, point-of-sale (POS), wine club, fulfillment and marketplace distribution solutions.

The unique end-to-end platform, which serves over 2,000 wineries worldwide, enables wineries to provide next-level service and create lasting customer relationships.

Watch BigCommerce CEO Brent Bellm and Jim Secord, WineDirect’s VP of Product, at NRF 2023 here.

Commerce-as-a-Service.

Commerce-as-a-service (CaaS) is a B2B service that lets businesses access ecommerce tools and services on a subscription basis, rather than purchasing and managing them in-house.

CaaS providers offer tools such as shopping carts, payment gateways, product listings and order management. While this infrastructure applies to almost any online business, using a CaaS provider specific to the wine industry such as Wine Direct gives you access to industry-specific tools and support.

CaaS providers typically charge a monthly or annual subscription fee to access their tools and services. These tools can be an attractive option for small businesses that lack the resources or expertise to build and maintain ecommerce infrastructure in-house.

Following the passage of the 21st Amendment, which ended the Prohibition era and reinstated the right to sell, manufacture, and distribute alcohol in the U.S., states were given free rein to write laws regarding alcohol distribution. This was both good and bad news for retailers.

When shipping wine out-of-state, you must adhere to wine shipping laws for both the shipping and receiving states. Most states permit winery direct shipping in some form. For example, some states allow consumers to buy a bottle of wine directly from an in-state winery but not from an out-of-state business — these are known as “non-reciprocal” states.

Forty-four states including Arizona, Georgia, Hawaii, Idaho and Colorado permit out-of-state wineries to offer direct shipping. However, most states prohibit out-of-state retailers from doing the same, except Oregon, North Dakota, Wyoming, Nebraska, Louisiana, Florida, Virginia and West Virginia. These restrictions persist despite the Supreme Court’s landmark Granholm decision, which held that it was unconstitutional for states to discriminate against out-of-state retailers.

Some states also limit how many cases wineries can ship monthly or annually to an individual consumer. For example, Minnesota permits wineries to ship up to two cases annually, while New York allows up to 36 cases.

Remember that before shipping wine out of state, you must obtain a shipping license from each state where you plan to do business by contacting the local tax office, submitting an application and paying a fee.

USPS does not ship alcohol, but couriers including UPS, DHL, and FedEx offer wine shipping for DTC wineries and retailers that hold applicable licenses to manufacture, sell, distribute or import alcohol.

The Wine Care Group is a dedicated wine shipping company that offers services for licensed wine retailers. Most carriers require wine shipments to be clearly labeled as alcohol and will apply a surcharge to the shipment.

The carrier must recognize your business as an authorized shipper before any shipments can be made. For example, FedEx requires businesses to sign alcohol shipping agreements and meet packaging and shipping label requirements.

Additionally, some carriers may restrict the type or quantity of wine shipped at one time. Be sure to research the specific wine shipping policies of the carrier you are considering to avoid product confiscation.

Selling wine overseas can be a lucrative opportunity, but it requires careful planning and attention to detail. According to UPS, the top five destinations for U.S.-produced wines are Canada, Japan, the United Kingdom, China and Hong Kong.

To ship wine overseas, carriers typically require sellers to provide the following to ensure the shipment clears customs at its destination:

• Importer’s license/permit.

• Wine “quality certificate.”

• Ingredient analysis and manufacturing process list.

Each country has laws and regulations regarding alcohol shipments — including quantities permitted and required paperwork — so do your research to avoid product loss.

Some countries, including Hungary, Serbia and the Czech Republic, require an excise license and/or bond form. Shipments of wines not originating from the U.S. may require a VI-1 form. UPS, DHL and FedEx ship wines internationally for licensed sellers.

International alcohol shipments using FedEx can only be delivered by FedEx Express, not FedEx International Ground Service.

Confirm product shippability.

While you may know the package restrictions for your domestic shipments, when shipping overseas, weight and size limits will often vary by the destination. Just as every state in the U.S. has unique restrictions, so does every country. Therefore, ensure you understand the exact shipping requirements for each country you want to ship to.

Package appropriately.

Packaging wine correctly is crucial to ensure the product arrives in good condition — i.e. no cork seepage, proper temperature control — and meets applicable regulations. Most couriers require wines to be packaged in molded polystyrene foam, a folded corrugated tray, a molded fiber tray or thermoformed plastic trays.

Generally, pre-molded wine shippers or wine boxes provide maximum protection. These boxes typically have dividers to hold the bottles in place and are made of sturdy materials to protect the bottles from damage.

• Use boxes and packing materials that are sturdy enough to protect the wine during transit.

• Provide proper labeling and documentation to ensure that the wine is shipped legally and in compliance with all applicable regulations. This may include customs forms, invoices and other required documents.

• Consider purchasing insurance to cover the cost of the wine in case it is damaged or lost during shipping.

Get to Know Customs documentation.

Before shipping wine abroad, consult the destination country’s customs office regarding the required documentation. You can also search the website of the Alcohol and Tobacco Tax and Trade Bureau to see the requirements for specific countries.

Generally, you will need to provide the following documentation:

• Commercial invoice: A document that provides product details, including the value and quantity of the wine.

• Certificate of origin: A document that confirms where the wine was produced, which may be required by some countries for import purposes.

• Import/export licenses: Some countries require import or export licenses for sellers to ship wine legally.

• Other required documents: Countries may have additional requirements for importing wine, such as health certificates or phytosanitary certificates.

The explosion in ecommerce fueled by the pandemic has created bountiful opportunities for online wine sellers. As the DTC model took off, wineries began hosting virtual tasting sessions and by-appointment tastings, two trends that endured even as COVID restrictions eased. These innovations show that the future of wine ecommerce will be shaped by technology.

According to the 2022 Direct-to-Consumer Wine Survey Report by Silicon Valley Bank, 44.9% of wine sellers surveyed planned to increase their digital marketing budget in 2022. The report also found that DTC dollar sales rose by 16.7% in 2021, with consumers tending to spend more per bottle and veering away from bottles priced below $11.

Here are some trends that may shape the future of wine ecommerce:

• Increased use of technology: Wine ecommerce businesses will continue to adopt new technologies to streamline the online shopping experience. For example, some wineries use virtual reality to create a multi-sensory wine-tasting experience.

• Wine club subscriptions: Many wineries offer subscriptions enabling wine enthusiasts to receive monthly shipments containing personalized wine selections. Subscriptions may include access to exclusive events. Members typically receive 15-20% off the suggested retail price per bottle.

• Personalization: Wineries will lean heavily on data and analytics to tailor personalized recommendations and offers to customers.

• Sustainable and eco-friendly practices: Eco-conscious wineries will focus on using sustainable packaging, reducing their carbon footprint, and supporting environmentally-friendly practices.

Human-centered selling.

Human-centered selling is an approach to sales that prioritizes the customer's needs, interests and pain points in the selling process. In the context of wine ecommerce, this means using questionnaires, behavioral data and market research to understand the customer’s wine preferences, and using this data to recommend the right products.

Wine ecommerce businesses should offer various options to suit different preferences and budgets, rather than pushing a single product or brand. Building long-term relationships with customers rather than focusing on a single sale are the key to customer loyalty and recurring revenue.

This may involve offering ongoing support, such as wine pairing recommendations, virtual wine tastings or educational resources.

Personalization.

As a growing share of wine sales occurs online, businesses are pressured to personalize the customer experience. Ecommerce recommendation engines enable businesses to use data and analytics to learn about their customers, such as their preferences and purchase history. This data can be used to offer product recommendations, promotional offers and messaging tailored to the customer.

Email marketing presents ripe opportunities for personalization. For example, if a customer leaves your website with items in their shopping cart, you can send a personalized cart abandonment email reminding the customer to complete the purchase. Alternatively, customers who reach a certain lifetime value may qualify for special discounts or exclusive events.

Retailers can also use customer data to offer personalized service and support, such as wine pairing recommendations or educational resources. Consider offering personalized product options, such as customized wine labels or personalized wine gift sets, to add a personal touch to the customer experience.

Frictionless buying process.

Reducing friction in the purchase process can mean the difference between profitability and unprofitability. Here are some tips to remember:

• Use clear and detailed product descriptions, high-quality images and a user-friendly website design to make it easy for customers to find and learn about your products.

• Allow customers to self-select their preferences. Make it easy for customers to filter product listings based on region, type, bottle size and more.

• Offer a live web chat service or questionnaire to help customers narrow down their preferred wines based on their preferences.

• Provide various payment options, including credit cards, debit cards and online payment systems like PayPal to make it easy for customers to pay for their purchases.

• Simplify the checkout process by reducing the number of steps required to complete a purchase, and minimize the amount of information customers need to enter.

• Provide clear shipping and return policies. Spell out the cost of shipping, delivery options and your return policy. This reduces uncertainty and makes customers feel more confident about their purchases.

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Wine ecommerce is a thriving industry ripe with opportunities for online sellers who produce high-quality products, comply with applicable state and federal regulations and do their research beforehand. Whether you open a winery, start a retail business or become a dropshipper, there are many options for starting a successful wine ecommerce business.

However, do your research beforehand to ensure you obtain all the necessary licenses and permits to operate a wine business within your state plus any states or countries in which you plan to do business.