Has Amazon figured out how to make wine work after two e-commerce flops?
Amazon has twice given up selling wine over the past decade, perhaps the two most notable flops in the e-commerce giant’s history. But it looks like the company may be getting ready to try again – call it Amazon wine 3.0.
The evidence comes from two places: First, a Washington, D.C.-area job posting for a “manager of alcohol public policy” – someone to “create, execute, and manage key public policy issues related to alcohol procurement and sales.” In other words, someone to navigate the three-tier system for the company, which it wouldn’t need unless it was getting ready to launch a major booze initiative. (A tip o’ the WC’s fedora to blog reader Tony Caffrey, who spotted the ad.)
Second, rumblings in the trade press that Amazon might buy or lease abandoned Kmart and Sears locations (and even Pier 1?) to open more Whole Foods; to set up some sort of warehouse/retail operation; to build more Amazon Go pop-up stores; or for something that no one but Amazon knows yet.
Amazon didn’t respond to an email request for an interview. But I talked to several supermarket analysts, and they agreed something may well be going on.
“Amazon doesn’t really get all that wrapped up in failure,” says Bill Bishop, the co-flounder of the well-respected Bricks Meets Clicks consultancy in Chicago. “It’s very much a learning organization. Wine in particular, and alcohol in general, is very attractive for an organization like Amazon.”
What makes Amazon think this effort will succeed when the first two failed? In 2009, it killed a test project called AmazonWine, in which it would have sold wine just like it sells books, computers, and garden hose, because the company couldn’t make it work given the complications of U.S. liquor laws. In 2017, it closed AmazonWine 2.0, in which it didn’t sell wine but sent buyers to winery websites to make the purchases – again, because of the complications of U.S. liquor laws.
It does sell wine on-line through Whole Foods, but the orders must be made using your local store’s website and you’re limited to the inventory at that store. Plus, you have to deal with a third-party delivery service and a potential delivery fee. Which is hardly the same as Amazon’s seemingly unlimited inventory and free Prime shipping.
The sense from the analysts is that the company figured out how to work within the three-tier system for what it’s going to try next, in much the same way that alcohol delivery apps like Drizly and Internet retailer Wine.com have figured it out. But don’t expect delivery, although that’s possible, as much as a variation on the current Whole Foods setup.
Amazon Wine 3.0
• You order wine from the Amazon website, which sends the order to a company distribution center in your state in one of those empty Sears stores. In this case, your choice could well be every wine available from your state’s distributors, based on the Drizly model.
• The Amazon retail/warehouse in the old Sears would have a standing inventory of the most commonly ordered wines, while special wines could be shipped from the distributor to the warehouse.
• You pick your order up at the old Sears store, in much the same way you can drop off Amazon returns at some Whole Foods stores.
The advantages here are obvious: Amazon has the booze supply chain infrastructure in each state where it operates Whole Foods, plus the leverage of existing Whole Foods liquor licenses. And, since you pay for the wine on the Amazon website, there’s less legal hassle about underage drinking. All you have to do is show an ID at the old Sears store when you pick up the wine.
In addition, says Bishop, advances in robotics may make it possible to run the retail/warehouse in the old Sears with a minimum of employees, trimming costs and allowing Amazon to undercut traditional wine retailers. Think of R2-D2s scurrying around the building, picking and sorting orders. The only humans needed would be to check IDs.
Will this happen tomorrow? Probably not. Will it happen in exactly this way? If I knew that, I’d be living in Burgundy. But I talked to some very smart people, and their consensus was that something like this makes sense, and it especially makes sense given Amazon’s seeming obsession with wine.