By Susan DeMatei
Wineries, as their true selves, are an agricultural business. Sagacious written advice for agriculture success has been around a long time – arguably since 800 BC when the Greeks wrote poetry now regarded as the first “farmer’s almanac.” But nothing in the past 2800 years has prepared us for the digital age. And, there is very little in a farmer’s world that seems in concert with a virtual one.
But, our little cottage industry is growing up, and we need to adopt practices now employed by the rest of the digital direct marketing landscape. Here are four ways our current DTC business model is evolving:
Shipping Will Continue to Morph into an Absorbed COG
Amazon has universally changed the online retail business model by encouraging free shipping. And now it seems that shipping is expedited on most orders, so free shipping now arrives within 1-2 days. It’s hard to compete with “free,” isn’t it? A frequent question we hear from wineries is how often, or how much, they should discount shipping.
Here’s the problem with that question: Amazon takes a loss on shipping. The amount of money that Amazon lost on shipping — a.k.a. the net cost of landing all those brown boxes on your doorstep in record time — reached nearly $7.2 billion in 20161. In fact, they report that they only cover half their costs.
Why do they do this? For one, offering free 2-day shipping ensures volume and repeats purchase loyalty. (Amazon posted an overall profit of $2.4 billion in 2016)2. The second reason is they look at their company as a whole to make decisions. So, while the ecommerce division may take a hit, other divisions such as their server hosting covers the gap with strong profits.
So what does this mean for wineries?
It means take a page from Amazon’s book. Start thinking of your shipping as a cost of goods (COG) just like your grapes, your labels, and your barrels. You don’t pass along costs for the cardboard shipper box or the glass bottle the wine is in, or the cork, so why do we have a culture of passing through the shipping charge? eCommerce has evolved to include shipping with purchase; stop fighting it. Maybe your MSRP has a slight increase, or the profit margin takes a slight hit, but the wineries that figure out how to manage shipping charges for their ecommerce and club businesses while keeping it out of the consumers’ sight will be the ones on top.
So what does this mean for wineries?
The expense of maintaining and staffing a tasting room is not small and needs to be returned by as many channels as possible. Stop just tracking sales, but look at contributing metrics as well. Wine club sign ups and capturing email addresses should be a paramount goal in the tasting room. And, of course, this is only valuable if you follow up with smart, consistent and engaging email marketing.
Facebook Is the Dominant Online Advertising Channel
One out of every five pages served up on the internet is a Facebook feed or page3. 83% of Women & 75% of Men Use Facebook today4 and they spend an average of 35 minutes a day on the platform5, visiting it around 8 times a day9.
Not since the 1950’s when there were just three TV networks has there been one single location with this massive reach. But, it gets better. Facebook knows what you like, and where you live, and what your friends do, and what you talk about. Facebook knows you. Creepy, but data nerds like us just love the targeting capability. So, not only is there a large pool to choose from but for a relatively modest amount, you can get your message to a precise target with very specific geographic, demographic and psychographic criteria.
So what does this mean for wineries?
It means that your “social media marketing” isn’t just remembering to post on your page twice a week. If you’re not taking advantage of custom audiences, retargeting, sequencing and other Facebook ad tools, you’re missing a massive opportunity to get your message out. Marketing campaigns that use email plus one or more digital media platform often experience up to 118% lift in response rate6. Therefore, the smart wineries will be the ones with integrated campaigns, and who upload their lists into Facebook and target accordingly.
Mobile Is the Dominant Online Channel
We’ve been talking for a while about the importance of mobile – but in 2018 it will literally take over. In this year, 80% of internet users will have a smartphone7 and they’ll spend 69% of their online time on the phone8. 79% will use their phone to read emails9 – which is a higher percentage than those who use it for making calls – and 80% of social media time will be on a phone10. Having your online content optimized for mobile viewing is no longer a suggestion, it’s an imperative.
We are seeing this demonstrated online everywhere. The mobile “hamburger” three bar expanding navigation is now becoming more prevalent on websites. There is no more “above the fold” so scrolling websites are the preferred content layout. And, column and table layout is a thing of the past. Most dramatically is the move toward graphics and away from text. With smaller screens and shorter attention spans, our communication preference has overwhelmingly swerved toward pictures. (Research suggests visuals are processed 60,000x faster than text!)11
So what does this mean for wineries?
Images matter in social and digital media. This means stop taking poorly lit photos of your wine. Stage the shot so that it entices the viewer to click and interact with your content in a 2″ space. Make your headlines large and graphic, and shy away from tiny silhouetted shots with labels you’d need a magnifying glass to read. You’ll hear people use the term “mobile first” which means design and test your emails and web content on your phone, over your desktop.
Sources:
- Geekwire
- Amazon annual report
- Infodocket
- Sprout Social
- Nielsen
- comScore
- Smart Insights
- comScore
- emailmonday
- emailmonday
- “The Power of Visual Communication” by Maneb and Hoehn
Expert Editorial
by Susan DeMatei, owner of WineGlass Marketing
Susan DeMatei has over 10 years of experience in winery consumer direct marketing, including Wine Club, database marketing, CRM, e-commerce, events and general luxury wine marketing encompassing awareness, conversion and loyalty. Overall, she has 20 years of experience specializing in direct sales to a luxury market.
Prior to 2012, Ms. DeMatei served as Direct Marketing Manager with Opus One Winery. Prior to that, she held marketing or account executive positions with Fosters Wine Estates, Goosecross Cellars, Butler Shine Stern & Partners, Modern Media, Goldberg Moser O’Neill, BBDO SF, and Mullen Advertising.
Ms DeMatei holds a B.S. in Communications from Boston University and an A.S. in Viticulture from Napa Valley College. She is a Certified Sommelier with the Court of Master Sommeliers and a Certified Specialist in Wine/Wine Education with the Society of Wine Educators.
WineGlass Marketing is a full service direct marketing firm working within the wine industry in Napa, California. www.wineglassmarketing.com
