By James Atkinson
Australian wineries including McWilliam’s, De Bortoli, Angove and Howard Vineyard have embraced an emerging wine e-commerce platform that better equips them to bypass retailers and distributors and go direct to consumers online.
Developed by Canada-based company BlackSquare, the Blackboxx wine e-commerce system was launched to the Australian market just 16 months ago, but has already been adopted by wineries with a combined market share of 10 per cent of the country’s wine production.
On a recent visit to Sydney, BlackSquare CEO Matthew Protti told TheShout that wineries have been slow to embrace direct-to-consumer e-commerce sales, effectively ceding the online channel to retailers and third parties like Cracka and GraysOnline.
“What we’ve done is handed the power back to the producers,” he said.
Protti said that with Australia Post offering an excellent wine shipping program, wineries in Australia are ideally placed to go direct to consumers, who are relatively patriotic in their wine consumption (as compared with other markets like Chile, where 80 per cent of wine produced is exported).
“And it’s a model that allows good sustainable margins for the producers – because you’re not working through a bunch of different distribution channels, the margins are more attractive than wholesale,” he said. [continued below]
L-R: BlackSquare Australian & NZ sales director Ross Wood, De Bortoli Wines marketing manager Toni Carlino, BlackSquare president David Gluzman and CEO Matthew Protti
Protti said Blackboxx differs to other e-commerce solutions firstly in that it is wine-specific and therefore suited to managing the unique nature of wine SKUs, which are structured around brands, vintages and varietals. It can also deal with in-depth tasting notes and present the wines in an eye-catching, aesthetically pleasing format.
Unlike other wine specific systems that are very US-focused, Protti said Blackboxx does not require any adaptation or customisation for use in the Australian market.
The system can also adequately handle the various different types of wine purchases consumers may make online, including recurring purchases such as wine club memberships and gift subscriptions.
“Both of our competitors in the wine space don’t do recurring e-commerce because it’s complicated from a technological point of view,” he said.
“We have the structures are in place to make this really easy.”
While wineries such as De Bortoli are using Blackboxx purely for their wine club e-commerce requirements, the system now powers all online transactions for others, including McWilliam’s.
Mr Protti will need to be very careful in his advice to wineries. I would be very unimpressed if, as a retailer, I purchased wines from a wine producer, or from a producers agent only to find said winery becoming my competitor. I think wineries would need to think very, very carefully about the way they go about adopting direct to consumer sales. My rule of thumb has been and always will be that wineries single bottle cellar door price should be at or above that offered by retailers with a standard margin. Full dozens of one product, of course could be anything over the normal wholesale cost inclusive of WET.
Cheers,
Steve
Unfortunately the Big Wholesalers do want a lot of volume and take a large margin. The opportunities are there for the smaller wineries who make exceptional wine in in much smaller quantities. Direct to the consumer can work well for them.