Wine.com was born in 1998 as eVineyard, at the beginning of a three-year period that saw a surge in dot-com investment flood into the wine business.
Then came the dot-bomb technology stock slide of 2000–2002 and massive consolidation in Internet business as funding dried up. VirtualVineyards.com merged with Napa-based WineShopper.com as Wine.com in 2000. The following spring, eVineyard acquired the assets of Wine.com out of bankruptcy and moved from Portland, Ore., to San Francisco.
“Some tried to create a buyer’s-agent model, going back 15 to 20 years,” said Osborn, 46. “We sought local licensing to be a local retailer of wine.”
Today, Wine.com employs under 100, ramping to more than 300 to fulfill fourth-quarter orders. Since it started, the company has shipped nearly $600 million worth of wine. Shipments have been growing each year, reaching nearly 3 million bottles in 2014 alone.
Being locally licensed as a retailer and being close enough to get to most wine consumers has prompted Wine.com to set up seven fulfillment centers around the country, including one in Berkeley to serve the West Coast. Each center is technically a store, but it’s set up more for efficient pick-and-pack operations than walk-in sales.
Requirements for adult signatures for alcoholic-beverage delivery did slow Internet sales until date-certain and other delivery methods could be worked out, Osborn said.
He is set to be on the “Routes to Market” panel at the Business Journal’s Wine Industry Conference on April 24. Osborn spoke with the Business Journal about what’s behind a 43 percent increase in the number of wines the company is making available to California customers, potential for disconnect between wine-buyer “gatekeepers” and choice-hungry consumers, and early branding success found via wine storytelling over online chat.
What are the top challenges for North Coast producers to get wine to consumers?: We believe growth in the selection of wines is paramount for our growth and what customers want. They want a broad assortment. The days of a small curated list are all but over. At any one time right now, customers in California have access to more than 7,000 unique wines. With vintage changes and some wines coming and going, like single-vineyard and other releases not lasting over the year, we can have over 18,000 uniques [available] over the course of a year.
One thing our customers care so much about is choice. So many times wine stores — a grocery retailer selling wine or specialty retail — made a buying decision for the consumer. Wine merchants as gatekeepers made a decision for what consumers want. I’ve had buyers say, “My customers never buy $20 petite sirah.” But then you look at their shelves and do not see $20 petite sirah, so no wonder. I’m not knocking restaurants with a theme that calls for certain wines, but at retail there’s nothing worse than making decisions for the consumer. We want to and do offer enormous selection to consumers.
This year we plan to add 3,000 more wines to our California assortment. That is what is in our California warehouse and available to the West Coast. Our assortments in units and revenue — over 55 percent is imported and 45 percent is domestic. Nielsen for the trailing year is reporting 25 [percent] to 26 percent [of U.S. wine sales] is imported and 75 percent domestic, but we’ve always had more imported wine purchased by customers. We have lot of assortment of domestic wines, but at the end of the day our customers are finding their way to buy more imported wine. The broader market is dictated by what retailers are doing. They have [fewer] linear feet so decisions are made for value-priced domestic wine.