Snooth Blog

Snooth User: Philip James

Amazon on Wine

Posted by Philip James, Mar 10, 2008.

Last week Amazon announced their entry into the wine retail market. As usual, Amazon is being tight lipped about what exactly their plans are, and the story has been widely mis-reported. Decanter, for example stated that it was via a partnership with Wine.com - unfortunately, that was in 2005 and only lasted a year.

I was called up by several reporters and spoke to a good number of people about this and what was most clear is no one actually knows the real story.

What is clear is that Amazon is a giant, sophisticated company, and to have them turn their attention to our little 'ol industry is a good thing. Its good for consumers of course - more competition improves selection and drives prices down. Its also good for Snooth. Sure, it may be more competition and if the giant rolls the wrong way they might crush us, but an industry without competition is not likely to be a profitable industry to be in. And having a large company decide to enter a once small market validates the fact that there's potential here.

At the moment I don't have more to add that that. What I said above is based on fact, the rest is conjecture. And without knowing Amazon's plans its hard to say much useful about it.

Amazon Fresh delivers fresh goods in the Seattle region. If the wine business merely complements that, they are just another regional store. If they decide to ship nationwide then they have to acquire licenses on a state by state basis, and that can take 6 months+. They could skip that and just focus on their zShops model and aggregate data, much like Snooth does. But this doesn't work either, as its illegal to charge someone's card for a wine purchase if you are not the license holder, and their current zShops model would need to be reworked to comply with the law here.

This will be Amazon's third foray into wine (after the wine.com partnership in 2005 and an investment into a wine.com predecessor in 1999) and I'm looking forward to seeing how it works out this time. If its successful, they could be as beneficial to the industry as Costco has been.

Some of us are talking about what it means here .

Replies

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Reply by andrew, Mar 10, 2008.

This should be interesting. Most of the smaller online wine-retailers I've worked with or researched focus on lesser known producers that you couldn't find in most stores (or in some cases, are the sole importer of said producer). I'm assuming they are going to try the "we sell absolutely everything - all discounted" strategy.

My hope is that they will help lobby state legislatures to adopt reasonable shipping legislation for wines, which will be good for everybody.

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Reply by Mark Angelillo, Mar 10, 2008.

I'm with Andrew. I could see them helping tremendously with that particular fight -- over time of course.

Blog comment by jan, Mar 11, 2008.

If Amazon does enter, it will raise awareness of wine for folks who might not otherwise be ineterested. Once new consumers become involved, they may then look for other ways to get information. In other words, this could spark a tremendous new market. Let's hope people become educated and sophisticated about wine...and then they can't help but turn to Snooth!

Blog comment by Chris, Mar 12, 2008.

As with all giants, we have to keep our eye on them, but I agree that it's a good sign for the market. I think that Snooth will maintain its niche as long as it provides community and expertise.

Amazon isn't in the business of education its customers, and it would be a herculean task to begin with, so I don't think they'll suddenly make an exception for wine. They may team up with Emeril or something, though, watch out.

I also think Amazon will be focused on throughput rather than focusing on wine enthusiasts.

On the flipside, I just can't associate Amazon with wine in my head. I always think about books, and I can't read when I've been drinking. Anybody else think there is branding dissonance?


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