To compile useful resources for the industry, the Oregon Wine Board staff attended three DTC education events:
- DTC Seminar featuring WISE Academy, e-Cellar, ShipCompliant, Oregon Wine Services – May 4
- Vin65 Roadshow – May 9
- Silicon Valley Bank Wine Sales Videocast – May 17
As DTC execution varies greatly from brand to brand, a spectrum of techniques and data is essential for tailoring fit. The events above presented a broad overview of experience and opinions in the DTC category. For example, WISE Academy offers training for tasting room managers and staff who are often the front line for customer data capture and club sales, while Silicon Valley Bank’s annual report is the most robust aggregate of high-level empirical industry data. Oregon Wine Services and e-Cellar offer varied services to make logistics easier to manage.
Considering DTC sales represent 60% of winery revenue on average in Oregon it is essential our industry is equipped to best execute DTC programming. Below are top-level notes from all events that will hopefully serve that execution.
While an essential component of wine sales, the DTC channel is diverse and can be complicated. A patchwork of state regulations and shipping compliance frustrate efforts towards scale and access. Tasting room staff training, customer data segmentation, tasting room experience formats, in-market experiences and shipping options all present opportunities for growth.
Tasting Rooms / First Exposure:
- Risk reduction is a psychological need for a first purchase. Tasting rooms act as risk reduction by providing trial and awareness.
- Conversion to bottle(s) purchase varies by tasting format, but “private” and “seated formal” produce the highest average purchase value. Conversion to wine club membership is also highest for “private” and “seated formal.” “Casual seated group” tastings return the lowest conversion and purchase value.
- About 2/3 of winery visitors who stood at the tasting room bar bought wine, but they spent only an average of $75. Private and seated formal tastings sold wine to 73% of customers, who spent an average of $461 each.
- It’s important to ask, if your tasting room is open to everyone are you able to spend the time needed on the most valuable visitors?
- WISE mystery shoppers were only asked to buy during/after a tasting 60% of the time. Only 40% of the time were they asked to join the wine club, and only 20% of the time were asked for data collection (email, etc).
Follow Up Purchases:
- It is axiomatic that no second contact happens without contact information. 41% of consumers prefer to receive emailed receipts (per UPS Pulse of the Customer Survey), this provides a great opportunity to increase your email capture rate. What data you collect may vary but some amount of the following is recommended:
- Name / Email / Phone / ZIP / DOB / Referral source
- Consider incentivizing tasting room staff for email captures. The rate of conversion from a “thank you for visiting” email that includes a prompt to purchase within 48-hours is 7.5%. Depending on your average order value, the act of capturing an email and sending the follow up message alone is valued at $ 12 / email. Mary Jo Dale of Vinventions claims the lifetime value of an email is $25.
- It is 3x more profitable to hold on to an existing club member than to acquire a new one. Focus on offer customization, product differentiation, and customer segmentation to retain members.
- As a form of risk reduction, WISE Academy shared that first-time online buyers disproportionately buy sample packs.
- Online sales make up 9% of general retail sales, but only 3% of wine sales. However, the amount of wine sold online is growing dramatically – up from 2.7 million cases in 2010 to 5.0 million cases in 2016.
- Notably, the wineries with the most online sales have a 4x larger email list and 60+% email capture rate of tasting room visitors.
- The consumer’s rising expectation of e-commerce generally is the biggest challenge facing wineries selling online. The cost of entry for consumers is typically that a) they can order from any device; b) their merchandise will arrive within 2 days; c) there are no shipping charges.
- Don’t over extend yourself. Choose markets you can understand, perform well in, and can be certain of legal compliance.
Tasting Room Alternatives:
- The industry only has one model: all club recruiting happens inside the tasting room. That is potentially a dangerous monoculture. Rob McMillan suggests for a DtC program to be effective long term it needs to be diversified beyond the tasting room.
- One idea: Go where existing club customers are and throw an exclusive event, allowing each member to bring guests. Make a goal of converting those guests to members. Leverage existing members and their network for advocacy.
- While easier said than done, a brand should strive to be viewed as a relationship, not just a commodity.
1. State Shipping Laws for Wineries Portal – Maintained by California Wine Institute and ShipCompliant
2. TTB Alcohol Beverage Authorities – By state
3. Wines & Vines and ShipCompliant 2017 DtC Wine Shipping Report
4. Oregon Wine Services and Storage –Temperature controlled storage and fulfillment
5. Vin65 Dtc Resources – On and offline wine sales tool
6. WISE Academy – Wine industry training
7. e-Cellar – Web-based DtC software