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Wine Internet Marketing: “every dollar spent online influences $5.70 spent in the store”

Wine Internet Marketing – just Cannibalization?

Planet Retail, a market research firm, has forecast that US online retail sales now account for 6% (4% in the UK) of all retail sales and will reach 8% in 2013. Some retailers are worried that they will be “Amazoned” out of business.

But I think the evidence is that once you start doing it yourself, selling wine online is about augmenting your bricks and mortar sales rather than cannibalizing them.

Here’s an excerpt from The Economist to support my point of view,

The concept of “multichannel” shopping, where people can buy the same items from the same retailer in several different ways—online, via their mobile phones and in shops—is gaining ground, and retailers are trying to encourage users of one channel to try another. Growing online traffic may actually increase sales in stores too. According to a spokesman for Macy’s, a department-store chain, every dollar a consumer spends online with Macy’s leads to $5.70 in spending at a Macy’s store within ten days, because consumers learn about other products online and come into stores to look them over before buying them. Many online retailers offer tools that let people locate the nearest outlet that has a given item in stock. (“Retail v e-tail in America – Bleak Friday“, Nov 26th 2009)

I think the real concern is when your local customers look to browse for wines before going in-store – and they can’t find your website.

So they become customers of competitors that do have websites, and you don’t lose one bottle of sales per month you lose five bottles per month (as per the Macy’s story above).

Does Wine Internet Marketing make you a Multi-Millionaire who only works 4 hours per week?

On the other hand some retailers have read an (in)famous book called the Four Hour Work Week (Tim Ferriss). It’s thesis is that the internet can allow you to work 4 hours a week and travel the world the rest of the time.

And the internet is full of such incredible, or incredulous, stories!

Many of which might be true but what you don’t see is the other 999 people who gave up when they found that it was just a mirage and a hopeful dream.

The Truth is in the Middle

An eCommerce site is unlikely to make you a millionaire but its also unlikely to cannabilize your sales. Its likely to increase your revenue by the industry average. An indication of that is the 6-8% above. Less if your site is poor and you do no marketing. More if you follow best practice: generate traffic, send it to a top ecommerce site, provide great customer service and then develop repeat business with good email marketing.

The WSJ has said one NY bricks and mortar wine store that went online increased sales by 15%. I think that’s a reasonable target. However the more enthusiastic you take to it the higher the sales.

Feel free to share how you or other retailers are doing by leaving a reply below,

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