How to build a wine e-commerce team, boost sales

COVID-19’s impact on the Northern California wine industry has been a roller coaster ride. Particularly on the smaller wineries that depend heavily on tasting room business and the direct-to-consumer (DTC) sales generated by visitors’ experiences, it’s been devastating.

The good news reported in our last column is that with travel to Wine Country at a virtual standstill, online wine sales have exploded. In April and May, WineDirect reported 340% year-over-year growth in DTC sales. In the first three weeks of April alone, DTC offset 82% of lost tasting room revenue.

With recovery from COVID still over the horizon the question arises: How can we capitalize on the shift to consumer online buying and strengthen sales? We already saw this shift happening before COVID, as reported in our February column.

And now, there’s no denying that in order to keep your wine and brand in front of customers, you need to think outside of the tasting room.

RaboResearch analysts’ conversations with wine industry executives show that building an e-commerce department, though it may be challenging for some, can pay off significantly in the long run. Buying a ready-made e-commerce team is also an option.

The first step in putting an e-commerce team in place is probably the most basic one: determining how it fits with — and differs from — sales and marketing. Our research indicates that the most successful e-commerce teams are typically housed in the sales department. In any case, wherever the team sits, it must work across organizational silos and have the resources and freedom to work effectively.

Just what sort of work does the team do?

• It wields expertise in sales, marketing and technology to develop a superior shopping experience.
• It manages the user experience, including site navigation, content development, checkout and promotional campaigns.
• It deploys its knowledge of technologies and tactics in product experience management (PXM), product information management (PIM), digital asset management (DAM), mobile device management (MDM) software and sophisticated analytics.

All this requires a director, a program manager and people with skills in digital marketing, web development, graphic design, copywriting, customer service, logistics, inventory, business analysis, software engineering and IT.

The following are the four steps we believe a well-capitalized e-commerce team needs to take.

Map the market; get the data

First, identify data sources for measuring sales on each platform and, if possible, data on how and why consumers use these platforms. This is key to measuring progress, setting key performance indicators (KPIs) and monitoring online shopping patterns.

The online alcohol ecosystem is complex. So, second, identify which channels are likeliest to prove successful for your brand, both during and after the pandemic. The team must build relationships with key people in each e-commerce platform, continually strengthen relationships with those platforms and, at the same time, learn how best to support its brand on each platform.

Onboard the tech; build the Infrastructure

The e-commerce team has to decide which technologies it needs, e.g., a platform for digesting e-commerce sales data and the best platform for DTC business.

Content management is often the greatest challenge. A source shared last year that “it is a multi-month project every single time” a brand wants to update content on a grocery retailer’s website. Tools like Salsify and Syndigo can help effectively and efficiently manage content on both retailer websites and distributors’ BTB e-commerce platforms like eRNDC and SGProof.

Unfortunately, it can take months to assemble technologies like these and learn how best to deploy them.

Educate everyone, internally and externally

The team has to raise awareness of the e-commerce channel across the organization. Marketing teams, sales teams and senior management often need help in understanding how to support the e-commerce channel.

And ultimately members of the sales organization need to be familiar with what goes into a successful e-commerce program in order to help drive sales with distributors and retailers. While e-commerce requires team members with specialized skills, success requires buy-in and understanding across the organization.

Delegate most day-to-day digital operations

Much of managing a winery’s e-commerce can and should be handled by others in the organization. Brands, for example, need to create digital content tailored to each retailer’s unique requirements. That should be the brand team’s responsibility. The e-commerce transition — building “digital muscle” — can take a couple of years, but it is critical to unlock its full potential. It requires support from the broader organization.

For more wine industry insights like these, call my colleague Steven Knudsen at the Rabo AgriFinance office in Santa Rosa at 707-591-8016 or email Steven.Knudsen@raboag.com.