Riding the Sea Change of Online Wine Sales w/ Tim Marson, MW, Wine.com
On this edition of the podcast, host Robert Vernick and co-host Peter Yeung interview Tim Marson, MW. He is the senior wine buyer at Wine.com, a website which has experienced a surge in popularity due to the Covid-19 pandemic. Tim has been in the industry
As the largest online retailer in the US, Wine.com was well positioned to take advantage of the surge in online ordering during the Covid pandemic. To capture and meet the demand, Tim Marson MW, head wine buyer for Wine.com, recounts their additional investment in marketing, streamlining of operations, and ramp up of hiring that contributed to 7x customer growth in a year. The tennis player Andy Roddick said it best on Twitter with a picture of a Wine.com box delivery, “not all heroes wear capes.”
Detailed Show Notes:
- Tim’s background
- Been working in wine for 23 years, straight from university
- Started in retail in 1997, in high street, main street, and on the wholesale side, mostly in London
- Moved to the US in 2011
- Has been at Wine.com for 4 years
- Wine.com overview
- Serves everyone
- Ships to 42 states + DC
- Demographics are evenly split, slightly higher male, slightly older than average
- app/mobile represents ~33% of business
- Covid-19 Lockdown Impacts
- mid-March 2020 - surge in demand for wine online
- 7x growth in new customers (April 2019 -> April 2020)
- Significant revenue growth ($164M in FY2020, ending March 2020, which represents 25% growth)
- Growth from the 3 “M’s” - mobile, millennials (~33% of customers and ~25% of revenue, buying fewer bottles at a time, but same price points as other generations), membership (Stewardship)
- Pricing per bottle dropped, ~$30/bottle April 2020 to $23/bottle April 2019
- Increase in sales per SKU by 4x, ~86 bottles/SKU in April 2020 vs ~20 bottles/SKU in April 2019
- Average bottles per order has been flat
- Selection shifts
- Sold ~19k SKUs in April 2020 (impact of long-tail of inventory)
- pre-Covid selection - ~16.5k SKUs available
- w/ Covid demand - reduced selections by ⅔ to help operations catch up
- Wholesalers keeping less inventory - more out of stocks for SKUs
- Staffing shortages
- Quickly hired ~500 people, similar to the Christmas season surge
- Most of the people in shipping centers
- ~100 people in customer service / chat function
- Continuing demand, did a survey of new customers
- All customer never bought wine online before
- 88% said they will buy wine online sometimes
- 36% said they will buy wine online most of the time
- Stewardship program
- $49/year for unlimited free shipping
- Customers spend ~$1,000/year on average
- Builds loyalty and revenue growth
- ~50% of revenue, ~130k members
- w/ Covid, new members growth 14x from April 2019 -> April 2020
- Re-subscription rate is high - ~75%
- Online chat function
- Helps people find the wine they’re looking for
- In lockdown, chat ~3.5-4x normal levels
- New customers needed more help than older customers
- Newer customers use chat more than prior customers
- Jobs are a great option for out-of-work sommeliers - had ~2,800 applicants for ~12 roles in online chat
- Launched spirits ~1 year ago in 4 states (FL, NY, NJ, & CA)
- ~15% of revenue in the markets its in
- Does not sell sake because of limited shelf life
- Does not sell beer because of lower price per bottle and higher weight (would be very high cost of shipping)
- Marketing spend
- Growth in Covid has come from ~⅓ in organic channels (e.g. - SEO, organic search) and ~⅔ in paid search (e.g. - Google, Instagram ads)
- Ramped up marketing spend in lockdown
- 3x spend over the last couple of months to capture the new surge in demand for online wine sales
- People had strong buying intent which led to higher conversions and higher ROI on ad spend
- Adapted marketing messages to address lockdown context, e.g. - virtual entertainment and happy hours, food pairs for at-home cooking, and education and discovery since people had more time
- Launch virtual tastings
- Can buy wines in advance and taste along
- Open to everyone, hosted on Zoom and posted to YouTube live
- Had big names, both winemakers and celebrities (e.g. - John Legend, Lisa Vanderpump)
- Wine “edutainment” - has introduced new customers to wine.com
- Covid anecdotes
- PA with Liquor Control Board closing stores became one of the biggest ship to states
Andy Roddick, the tennis player, sent a tweet with a photo of wine.com boxes with a quote “not all heroes wear capes”, which led to wine.com warehouse workers wearing this as a t-shirt
