10.20.2016  
 

Has the Sizzle Left Wine Flash Sales?

Total offers down for most of 2016 based on Wines Vines Analytics

 
by Andrew Adams
 
wine flash sales
 
San Rafael, Calif.—In 2011, Wines Vines Analytics began tracking what was then the relatively new trend of third-party websites selling wine at deeply discounted prices for a short amount of time.

Many of the wines being sold for between 30% and 50% off retail were well-known brands that were a hit with consumers on the hunt for bargains.

Flash sites also proved a popular dumping ground for wineries and distributors stuck with held-over inventory from the recession that began in 2008. When Wines Vines Analytics, which compiles data for the regular Wine Industry Metrics reports, began tracking offers by the websites, the number of flash offers was growing by double digits every month.

The conventional wisdom then was that as a product of the recession, the websites would soon falter, or the number of their offers would drop as the excess inventory of wine was sold. By 2013, however, that hadn’t happened, and while a few smaller sites had disappeared and one leading website (Lot 18) had to reorganize itself, the amount of wine being offered through such websites had only grown.

In September 2012, total flash offers were up 11% compared to the previous year, and in September 2013 they grew 17% to reach 559 such offers.

September 2014 was a quiet month, and the offer total fell 34% from 559 to 371. The 12-month total number of offers, however, remained 18% higher than the previous year. In September 2015, the offer total shot up 88% higher than in 2014 and was 25% higher than in 2013.

The Wines Vines Analytics team captures flash offer details as they are made public. All 17 flash websites are tracked, and each wine offer is reviewed and tied to the source winery. Wines Vines Analytics only tracks offers for domestic wines. The regular Wine Industry Metrics reports are also only focused on the U.S. wine industry.

Each month the flash section of the metrics reports contain the monthly total compared to last year and the rolling 12-month total of flash offers.

For the first time since Wines Vines Analytics started tracking offers, the monthly flash offer total has been regularly lower than the previous year. The monthly total was 6% lower in January, 18% lower in February and dropped in every other month except March, when it grew by 1% and in May when it was up just 2%.

As growth in the number of flash offers slowed, all the other industry metrics have shown solid or robust growth. The volume and value of direct-to-consumer shipments has grown steadily through 2016 and was up 26% in September compared to September 2015, with $82 million in sales. Total domestic wine sales in all channels also have grown steadily and were up 3% to nearly $3 billion in September.

In the 12 months ending Sept. 30, nearly all of the 10 major flash websites offered fewer wines than they did in the same period ending Sept. 30, 2015. (None of the flash sites shares sales value or volume.)

Invino, which has continued to offer the most wine of all flash sites, has made 9% fewer offers this year. Last Call Wines made 9% fewer offers; Wines Til Sold Out (WTSO) was down 11%, and Wine Woot’s total offers fell by 22%

Does the decline in offers indicate that the excess inventory of wine has finally dried up? Has the flash market proved as short lived as the name implies?

Not all of the major sites have made fewer offers, however. Since it all but abandoned the flash market a few years ago, Lot 18’s offer activity has steadily increased and rose 10% over the previous year. Last Bottle Wines’ offers increased 26% from 399 to 504.

Another key point is that offers are not sales. The websites could be reducing the number of offers to match sales volume, or they could be paring down the number of wines they sell based on those with a proven track record of selling. Wineshopper, which was purchased by Wine.com about a decade ago, also ceased offering wine this year.

Tony Westfall, founder and president of Invino, said the company’s revenues are up 20% this year. “Feels like (offers) should be pretty consistent though, but quite honestly, I don’t consider us a flash site. We have CellarThief for that, and it’s not really a metric I track,” he said via e-mail.

Invino and CellarThief are both part of Sonoma, Calif.-based Good Company Wines, which also offers online wine stores, fulfillment services, marketing and other services. “At any given time on our site, we have hundreds of wines for sale in our various shops,” Westfall said. “We see most of our revenue these days coming from the shops and not the new wines that we have launched that day.”

A spokesperson for WTSO said their numbers on offers were much different but did not want to comment further.

Jason Sieber, “Agent Red” with Wine Spies, said the website’s offers have increased this year. “As for ‘less wine’ available, we have not seen this to be the case. Supply is stronger than ever,” he said in an email.

Rich Bergsund, CEO of Wine.com, told Wines & Vines in an email that consumers seem to appreciate a little more to the experience of buying wine than just price. “Over the years, we arrived at the conclusion that there is a ceiling on how much wine you can sell with a ‘push’ method, lacking any real personalization or factoring in of people's individual tastes,” he said. “If you have a great price, which was probably more true in the wake of the recession, sometimes that makes up for it and people will buy just to try it out.”

He said price discounts are still marketed on Wine.com, but the company has found growth is more driven by the website’s wide selection and “then helping people find wine that fits their particular tastes.”

In the case of Wine.com, this is done through live chat sommeliers and by using consumer ratings of the wines they buy to suggest other wines through email offers and while they’re perusing the site. “This type of service out-performs flash sales, especially in customer loyalty, hence we said goodbye to WineShopper and handle all of our selection and service through our core Wine.com site.”

DtC sales totaled $2.2 billion in the 12 months through September, and there is no indication that will slow as more wineries see sales in their tasting rooms, wine clubs or online as a key to profitability and growing sales. It remains to be seen if flash websites will be part of that growth.

Tammy Boatwright, president and founder of the DtC consultancy and management firm VingDirect, said her clients don’t see them that way. “For our clients, flash sites are definitely used only as a means to move long inventory,” she said.

This perception hasn’t changed because of the lower margins and long-lasting “virtual footprint” of the steep discount that lingers long after the sale. “For wineries focused on building brand value, these sites are rarely a good option,” she said. “There are options other than flash sites which move larger volume that, in my opinion, aren't so destructive to brand image.”

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LATEST READER COMMENTS
 
 
Posted on 10.25.2016 - 07:36:34 PST
 
I am sure there is also a correlation with the growth of BevMo, Whole Foods, Costco, and Safeway in the growth of wine sales with discount prices. Another so unloading point.
 
Guest
 
 

 
Posted on 10.25.2016 - 12:00:22 PST
 
Some major omissions such as Vivino. They have thousands of flash sale offers every year in their mobile app and push deals through email and on Facebook.
 
Guest
 
 

 
Posted on 10.25.2016 - 12:13:40 PST
 
Is the limited number of wine Flash Sales due to lack of interest or lack of available wines? It's the old chicken or the egg story.
 
Michael Ge
 
 

 
Posted on 10.25.2016 - 12:33:40 PST
 
Thanks for reading and commenting. Regarding Vivino, the site operates as an online retailer more than a site dedicated to daily or limited-time offers so we don't categorize it as a flash reseller.
 
Andrew Adams
 
 
 
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