Is Amazon getting back into the wine business?

Amazon, the world's largest on-line retailer, wants to insert itself into the wine direct shipping picture without actually shipping any wine.

The on-line retailer isn’t commenting. But Wine Industry Insight and the Wall Street Journal reported last week that Amazon will allow some California wineries to participate in its third-party resellers program, in which Amazon lists the items for sale but doesn’t actually sell them itself.

Needless to say, the wineries were agog at the opportunity to be part of Amazon, which is the fifth most visited website in the U.S. and does almost $13 billion a year. Lew Perdue at Wine Industry Insight wrote that he was contacted by “numerous” producers who wanted to know who to call at Amazon so they could sign up.

The legal experts I talked to were less enthusiastic. They asked not to be quoted by name, since they didn’t know exactly how Amazon wanted to put the program together -- though it is apparently based on a 2011 decision by California Alcoholic Beverage Control to allow this sort of thing.

But all agreed that the program could still encounter any number of problems, given the complexity of the three-tier system, which governs alcohol sales in the U.S.; the legal quagmire that is direct shipping law, with 50 laws for 50 states; and newly aggressive state regulators, who might be inclined to sue Amazon just because.

Said one high-profile liquor law attorney: “It has a lot of moving parts and there are lots of semi-vague statutory commands buried in there, and so lots of problems to work through with even the best intentioned regulators. For those who just don’t want it to work, there are lots of opportunities to provoke expensive and time consuming litigation.”

Which, of course, was the reason Amazon got out of the wine business in 2009, after a mostly failed test program that showed just how complicated direct shipping was. Why the company decided to do it again, given those difficulties, could be even more interesting than actually doing it.

Drawing courtesy Appellation America, using a Creative Commons license

 

Comments

[Don Julien]

Amazon didn't stay out of the wine business very long, considering they bought Woot.com in 2010. And the business profile for their new venture sure sounds an awful lot like wine.woot's modus operandi...basically marketing & brokering the sale, while the winery delivers the goods. So, Amazon's had two years to test a new approach, legal hurdles & all. Oh, and over the past six months, it seems Woot's Dallas office has been hiring lots of buyers (toys, electronics, apparel, etc), inventory & warehousing folks, but the Seattle office has been hiring software developers, project directors & marketing folks...

[Jeff Siegel]

Yes, Amazon owns Woot. But Woot is tiny -- at most 1,000 cases a day -- and does a lot of closeouts. That's a far cry from what Amazon apparently wants to do with this project.

Which is why the move is so curious, as is the timing. One would think that if it wanted to get started for the holidays, it would have met with the wineries long before it did.