Wine Flash Sale Sites Are nothing New…Just Flashier
Wines & Vines Magazine has done a terrific job surveying the landscape of the relatively new "Flash Sale Wine Websites". These are deep discounters on the web that offer generally one wine for a limited amount of time at a significant discount.
The Wines & Vines Articles, written by Paul Franson, identifies the largest of these sites along with some pretty interesting metrics surrounding average discount and traffic to the Flash Sale web sites.
The big question surrounding Flash Sale sites is will they be around when the economy starts to hum again (don't worry, it will.)? I've actually been asked this question by three reporters in the past couple months, none of whom were doing stories on just flash sales.
The answer is that of course Flash Sales will be around when the economy starts humming. There has always been a need for a back channel through which wineries or wholesalers or retailers could quietly move lots of wine that wasn't moving through the traditional channels. Sometimes those channels were cruise ships, airlines, regional grocery stores. Today, you can add Flash Sale to that mix.
But here's the thing that I guess goes without saying, perhaps because it's too obvious: No producer, no wholesaler and no retailer thinks sending cases of wine through a deep discounter like the Flash Sale sites is a good idea, is good for the brand, or is a sound marketing strategy. Using these sites and seeing wines sold at 30% to 60% off their suggested retail price always damages the brand. The damage may not be severe. The damage may not kill the patient. But it does damage the desired price floor for the product. There is no getting around this.
Nevertheless, these site serve a real purpose for wineries. It allows them to move a slow selling wine or get wine out of a warehouse with relatively little public exposure. Whether one takes a loss on the wine or breaks even often isn't the point. Sometimes its just a matter of getting the bottles out the damn door.
For consumers with a penchant for bargains and trying new wines the Flash Sale Wine Sites are manna from heaven. Whether the economy is in the dumper or moving along swiftly, there will always be call for bargains…one more reason flash sales won't go away…ever.
I agree that it was an interesting piece, although the web traffic numbers are really apples vs. oranges because the the very different ways that the websites operate.
A few comments:
1. Many wineries report increases in club memberships and direct sales (even at full price) due to the “flash” exposure.
2. There are a fair number of CA wineries that would no longer be in business if they were not able to use this channel to quickly convert their inventory to cash during this downturn.
3. Some very big name wineries allowed flash sites to be the first to offer their flagship wine upon release – at a good price, but not heavily discounted
Imma gonna go read the article later…;) But the thing to remember is that there are flash sites and there are flash sites. Some expect very deep discounts while others not so much. And some expect you to market the flash site to your customer list – which is something I just cannot justify.
Also (with the right flash site) I think at 30-40% you are not damaging your brand as long as you treat it and present it as a loss leader (the purpose being to encourage fence sitters to finally try your wine.) When you get into the 50%+ you are in dangerous territory.
At the end of it, it’s up to the winery to make best use of a good flash offer and get those conversions to regular customers. It’s definitely possible.
Cellars gain from flash-exposure in an otherwise crowded market at the same time could convert consumers to their brand. As long as new cellars keep arriving in any market someone else is going to get squeezed out of his share. We pay the cellar a fair price that is sustainable and squeeze the middle so that the consumer wins – do other sites do the same? hmm
The wine flash sites should at the very least give wine suppliers the names and email addresses of those who purchased their wines. Some of the social group shopping already do this.
Also, the key metric should be the size of their email database, not the traffic to their sites.
A agree with the comments posted…
Tom, over the years I’ve rarely disagreed with your opinions, but I believe “that nobody thinks these sites are a good idea” is a bit too broad. In the online world, each of these “flash-sites” are incredibly different and are used for different reasons by producers.
I’ve now done everything in the wine-supply-chain but grow the grapes and make the wine and recently experienced my first “flash site” promo for clients using Wine.Woot! which produced fantastic results for the wineries.
I get the discounting for now (hell, brick & mortars discount like crazy) and believe the retail prices will be rising along with the economic improvement. But in this case, Wine.Woot! offered a very mindful sales experience for the winery. An impressive amount of cases-sold in 24-hours, in addition to providing an in-depth branding opportunity during the promotion with their very active online community.
After the sale, the winery then had the opportunity to send follow-up communication to every Wine.Woot! consumer who bought the offer. This extension to the direct sales channel was one of the smartest and turnkey promos I’ve encountered over the years.
So much so that (BREAKING NEWS) I’ve joined the Wine Country Connect team who is the “wine-engine” behind Wine.Woot! and also Rue La La. After years of wrangling sales through the 3-Tier system, I believe what Wine.Woot! is offering is a real sustainable & valuable sales channel for wineries to develop & strengthen sales for their direct to consumer business. This direct sales & marketing channel in particular does not “damage the brand”.
Partnering with the “mindful” flash-sites (which I really dislike this description “flash site”, Wine.Woot! is an advertising portal) most certainly expose and enhance brands to a new platform of wine consumers.
This massive exposure results in more case sales for wineries and I love that! Ali
TexaCali,
I too think it’s too broad a statement to say “that nobody thinks these sites are a good idea”. That’s why I didn’t say it. What I said was: “No producer, no wholesaler and no retailer thinks sending cases of wine through a deep discounter like the Flash Sale sites is a good idea, is good for the brand, or is a sound marketing strategy.”
I agree however that the Woot model is a good one and useful and beneficial to many brands. And it is most certainly useful and beneficial to consumers. However, the flash sale channel is most certainly not the basis upon which I would create a marketing strategy for a wine brand—(Strike that….Maybe I would. Wouldn’t it be interesting to only sell really HIGH SCORING, WELL REVIEWED, COVETED, $150+ wine Only via the Flash Sale model).
The only metric that is important is how many cases of wine these sites can actually move. Certainly the top sites can move 400 to 500 cases in a matter of a few hours.
The problem with the metrics presented is that:
Cinderella requires you to go to the site to see the wine.
WTSO only requires you to go to the site to make an actual purchase.
Woot is more of a community and people go on and off the site to post comments, significantly inflating their numbers.
And so on… unfortunately, as these are private companies, it will be impossible to ever compare actual sales numbers.
Actually, on wine.woot they post the total units sold and lots of fun stats for every deal. Here’s our most recent offering as an example:
http://wine.woot.com/Forums/ViewPost.aspx?PostID=4318383
Jefe,
Yes, they do show their metrics, which confirm that their site visits do not correlate with their sales, but certainly gives a participating winery a very good idea about how their wine might perform.
My point was that in analyzing competing sites, the numbers presented are not valid because of the different “models” under which each operates.
Yes, agreed. Someday we’ll have standards, I hope!
I have to say I disagree with a main premise of this article: “these site serve a real purpose for wineries. It allows them to move a slow selling wine or get wine out of a warehouse with relatively little public exposure.” These sites serve a much larger purpose. Wineries have the opportunity to reach a huge number of people with their wines. One of the channels we use has a mailing list of over 400,000 people. We ran a winery client through their system 8 times last year. That is 3.2 million impressions for that winery last year through one channel. Their sales grew 30% outside of the digital channel in a year when most were down. Where is there another channel that can deliver that? There is no other channel that delivers the branding ability of the digital flash. In full disclosure, our company, Preston-Layne represents wineries in the digital event channels as well as in the three tier network.
Really it is very useful post and I like to read these type of posts and thanks for sharing such type of posts please keep it sharing.