2012 Wine Industry Innovation of the Year: WineNabber

Tuesday, January 1, 2013


"The best deals for wine are in email offers from online wine stores…"

A few months ago I discovered WineNabber - a service which helps wine enthusiasts efficiently discover high quality wine deals customized to their interests. After spending time getting to know the service and the guys who created it I think it's the wine industry innovation of the year.

I've also noticed two things:
  1. The best ideas are often easily explained
  2. Things created by people immersed in a field tend to align well with user expectations
Over the past few years I've spent a lot of time exploring ways to find the best deals on wine. Although wine has relatively low gross margins -- a bottle a retailer sells for $15 before case discounts costs them roughly $10 -- the price disparity for a specific bottle of wine varies wildly across the country.

I've seen wines sell for $120/bottle in Massachusetts (at full retail) that can be had for $39.99 on a flash sale in another state. With 3x price variability like this it pays to pay attention to wine deals, especially if you're an enthusiast who spends a substantial amount of money on wine each year.

But with 33% margins, how is it that prices can vary this much? It happens because different distributors in different states sell wines for different prices. They sell at different prices because they buy at different prices -or- because they want to close out a vintage to make way for a new one. For example, if a distributor in New York or New Jersey can strike a deal with the winery or importer to move a lot of wine at a lower price the wine will appear for much lower prices in these states than in others.

As you can imagine, distributors and retailers in other states are often annoyed by this because it makes their prices appear high. And wineries and importers don't like to see their brand tarnished by being sold at a low price. These comparisons have become glaringly apparent with the rise of Wine-Searcher.com - a service that compares the prices of specific bottles of wine across retailers across the world.

Retailers have taken to using email offers to fly under the radar screen. These offers never appear on search engines and, if the retailer has a large enough customer base, are only available for a few hours or days.

So savvy consumers, understanding the situation, subscribe to more and more wine retailer email lists. After a while they find themselves manually sifting through dozens or more emails a day hoping to find the very best wine deals. Some retailers have a better batting average than others but the fear of missing out causes us to tolerate the low performing retailer who occasionally offers an amazing offer. So the inbox gets pounded, consumers get overwhelmed, and after a while we stop paying close attention.

Enter WineNabber


WineNabber founders Peter Rothschild and Sev Onyshkevych found themselves in exactly this predicament a few years ago. But unlike many of us, who just slog through it and unsubscribe from the retailers with the least compelling offers, they came up with an innovative solution. They subscribed to every wine retailer email they could find, wrote a computer program to parse the data, and applied filters which enabled them to separate the wheat from the chaff.

To understand what WineNabber is like, it helps to understand how Peter and Sev operate. When Sev was a freshman at Princeton back in the late '70s he was writing custom software to help businesses keep track of data. He found he could reuse his efforts more effectively if he created a spreadsheet of sorts so he wrote one of the first spreadsheet applications for an Apple computer. He sold it as a custom software package, bundled with an Apple II for $100,000 a piece. After selling 400 of these packages he had enough to buy a Ferrari - before he had a driver's license. It sat out in front of his dorm and he'd have his older friends drive him around in it.

But Sev's innovative ways didn't stop there. He wrote a program that converted stenography from court reporters to a digital format. Then he met Peter and they developed a solution for more accurately estimating clothing sizes to reduce high return rates for online clothing retailers which was eventually acquired by Lands End. The recurring theme of cross-discipline problem solving and, even more interestingly for me, having an eye for solutions that have a business model behind them convey across each problem he's tackled.

Peter is the business brains behind the operation and a true wine enthusiast with an eye for deals. He lives in a part of Vermont underserved by fine wine merchants so online offers were particularly interesting to him.

Anatomy of a WineNabber Offer


A WineNabber offer includes the following:
  • An overall "rating" of the offer on a 5 star scale
  • The wine being offered
  • The region/subregion the wine is from
  • The price
  • Shipping costs
  • Comparable prices
  • Ratings from major publications
  • The vendor
  • A description of the wine 
The idea is to present consumers with everything they need to make an informed decision about whether to purchase the wine.

Consumers can adjust their preferences according to:
  • Which state(s) they can receive shipments to (since retailers have varying policies about which states they can ship to)
  • Price
  • Ratings
  • Region
  • Type/Varietal
The idea is to provide consumers with just the offers they'd actually consider buying.

In total, a WineNabber offer provides a consolidated view of an actionable buying opportunity with independently validated ratings and comparable pricing. Pretty cool, right?

How Well Does It Work?


How well WineNabber works for you depends on a number of factors. First, you have to live in or have a convenient shipping situation to a state with favorable shipping laws. Second, I think you have to be willing to spend $15/bottle or more on wine. South of this, it's tough to bury shipping costs in the transaction. Occasionally you'll find deals on $10 bottles that include free shipping but it's not where the best action is. That said, I'd rather drink $30 wine I paid $15 for than a $15 wine at full markup.

Once you're comfortable buying wine online you've probably naturally built up a list of preferred retailers. When you subscribe to WineNabber you'll probably find that you get an email blast from the retailer and then that same offer from WineNabber. At first this can be annoying but either the retailer's offers are so good you'll forgive the duplicate notification -or- you'll unsubscribe from the retailer's list and just catch them from WineNabber.

One scenario I've noticed multiple times is when a retailer offers more than one wine in an email blast and I didn't scan the offer carefully enough. I notice later, thanks to WineNabber, that I missed a wine which meets my criteria.

Discussion


When I first heard of WineNabber, I wondered whether retailers were happy with their email offers being rebroadcast like this. You'd be surprised how some retailers actually don't want their offers to get publicity for the reasons outlined above. But the offers WineNabber work with are from retailers who have agreed to work with WineNabber. In fact, they pay WineNabber for sending traffic/purchases their way in a variety of per-click/per-transaction affiliate arrangements.

WineNabber has done an impressive job signing up retailers (here's a list of some they work with). If you peruse the list I think you'll agree many of the heavy hitters/usual suspects are represented.

The only thing that's missing is the "list behind the list". The preferred client list that retailers populate with email addresses of their best customers where the really good deals are. This practice is illegal in Massachusetts (retailers ought not offer wine to one person and not to another and cannot offer wine to different people at different prices) but this practice seems to be quite popular in other states. It's sort of the wine deal equivalent to hyper miling - not for the amateur or casually interested.

For Consumers


For friends just getting interested in online wine deals, I think WineNabber is a great place to start. Tired of paying $12.99 for Estancia, Clos du Bois, Rodney Strong and similar at the grocery store/warehouse club? I think WineNabber could efficiently open up awareness to great wine deals online.

For the hardcore wine deal enthusiast WineNabber is definitely something to check out. You'll likely discover some new retailers that weren't on your radar screen and you'll likely be able to relieve some inbox fatigue by unsubscribing to retailers with a low batting average for your preferences.

For Retailers


I think WineNabber is a particularly good fit for wine retailers looking to amplify their email offers. It's hard to build up a list of wine enthusiasts ready to buy online, and for retailers with ready access to good wine they can offer on thin margins or compelling price points WineNabber provides immediate access.

One of the interesting things about email-based wine retail is how lightweight it can be. I've seen retailers do millions of dollars (literally) in annual wine sales without an e-commerce site. They do, however, take the time to curate and present compelling offers and create a more personal connection with their clients. Email offers aren't for every retailer's specialty, but I think most all retailers would benefit from some amount of regular email communication with their customers and what better way to say hello than with a deal?

Conclusion and Recommendations


Folks in the wine industry often lament how online wine commerce is behind the times. In some instances that's true, but there are some very useful innovations going on - and WineNabber is one of them.

Since discovering WineNabber I've been wondering: Am I leaving money on the table when purchasing other things online? Things like musical instruments, shoes, mattresses, vacations... Some of the best deals aren't online as I wrote in this blog post a while back.

If I purchased things in other categories more frequently would I be more savvy in navigating the space and finding the best deals? Although wine is unique in many ways, each industry has unique pricing pressures and dynamics that make them targets for disruptive innovation. Yipit does this in the daily deals space. WineNabber brings a unique spin on this for wine email offers.

Simply put, it's the most notable wine industry innovation I discovered in 2012.

To check it out and create an account visit:
WineNabber.com

Disclosure: This post was written in 2012. In 2014 WineNabber signed on as a WWP sponsor.

Questions of the Day: Have you tried WineNabber? If so, what do you think? What notable wine industry innovations have you discovered lately?

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