This concerns small US producers whose wine goes into distribution on some level, not those who only sell through allocation. Generally the producer will price their own wine above retailers. This is not surprising–they shouldn’t undercut the folks who are moving their wine in bulk. But when it comes to shipping, they often charge significantly more than retailers as well.
The producer is cutting out the middle man with direct sales yet protecting the retail price point at the same time. Sounds like win-win right there. So why deter direct sales with large S&H charges? Charging 10%-20% higher base price with around double the shipping rate of a place like K&L or Winex (say $4-$6 per bottle direct from producer vs. $2-$3 from a retailer) doesn’t sound like a way to attract web/phone orders.
If producers can sell through this way or move most of their wine through others channels, then it really doesn’t matter. But it would be nice to support producers directly without often paying a significantly higher per bottle price. It’s just hard to understand how putting a distributor and retailer in the mix can deliver wine for a noticeably lower price than producer alone with no middle man eating into profit margins.
Greg,
I am not sure what stores like K&L are paying for shipping, but I suspect they pay a reduced rate by comparison to us, small producers. We (Clos Saron) do not make a profit from the shipping and probably “loose” money for the handling/packaging. Before quoting shipping rate, we get a quote from the FedEx site and charge $3-5 above that to cover the cost of the packaging materials. And, yes, it is expensive - to the East Coast it comes to about $40/case.
One thing to consider is that small fish like us pay top $ for all of our supplies: bottles, corks, packaging materials, shipping tape, capsules/wax, shipping, delivery, barrels, etc. Yes, we have a better profit margin when we sell direct, but this is balanced with the sales to the Trade and Distributors, where our margins are very slim. Our yearly budgeting has to be based on the total sales, and the room for absorbing free shipping and other forms of discounts is very limited. That is unless we inflate our prices initially to make it look like we give you a good deal when we discount it later…
Some small producers use and often store their wine at fulfiment centers. Dedicated shippers and fulfiment centers have to make their operating costs and profits on shipping. it is probably cheaper and more expedient to use a fulfiment center than to hire employees to handle shipping.
Not sure what constitues a small producer and how it comes into play here. All the shipping I get (Foxen, Justin, Ridge, Cold Heaven, and from storage in Paso) is priced the same. The two wineries that charge less are Tablas (roughly 20% off) and Coastview (free for case, priced the same as others for less than a case).
Also when I was shipping in Nov, UPS ground from Paso to MD was closer to $60/case.
As retailers can not ship directly to MD, I don’t purchase much that way. The once or twice I had a retailer ship to DC, I don’t recall shipping being significantly less.
Whether absentee or not, I know I have dropped mailing lists due to high shipping costs. I’d like to think that I make buying decisions based on the “all-in” cost, but sometimes when I see $40-$50+ shipping costs, I exit the ordering process then and there.
I wonder what percent of producers subsidize shipping costs, and whether that percent is lower for small producers.
There is no free lunch.
If there is no charge for shipping, you are paying for it in the cost of the wine.
When things are desperate for any business, things/services are sold at a loss to simply get some cash-flow and survive the short-term. While you may choose to take advantage of such opportunities, you also have to realize that it is in your own long term interest to pay enough for anything you buy to allow for profit to be made by everyone involved.
The lesson of recent history is exactly that - everybody loses when any part of the chain does not get its fair dues.
Morgan at Bedrock uses Vinfillment and he is by no means an absentee owner. He is a one man show, however, and a fulfilment center probably makes the most sense for his operation.
It seems to me that some people think that their product is special and that buyers should do whatever they say to get it. It also seems that some places haven’t thought through how the buyer would evaluate the various ways of getting their product. Or, they have and they’d rather you get it through distribution than bother them.
Warning! ITB Post…
I hope this thread is an OK place to get feedback from Berserkers on our approach. If not, let me know and I can delete all but the top part or the whole thing.
Here is what we do and I’d invite any comments people here have on it:
We can offer modest discounts from our retail price for case purchases. We ship fedex, and as Wine Institute members, we get substantial discounts compared to UPS. We charge the actual cost of the shipping plus our actual cost for the materials. No handling fee is added. There is margin in the sale to cover that on all but ones or twos. The highest I have seen is $40-45 per case cross country including the materials. I have to admit that sometimes I have mixed feelings about being in the cellar packing boxes when there is other stuff that needs doing. But, anyone who goes through trouble of placing an order directly should get good, promt service.
If people want deeper discounts we have a club. The club is rather informal and we try to make it easy for people to satisfy the requirements of being in the club.
PS. I know there are differing service levels between UPS and Fedex, but it seems to vary driver by driver. Our local Fedex guys are fantastic.
I have a local merchant who offers the wines of several favorite wineries at a small discount and I can pick them up. I still have a half case waiting to be shipped from one of the WA wineries which I will have to pay full price + shipping. I asked them if they could send them with his next order, and they said no can do. $25 to ship 6 wines 300 mi. seemed a bit much. Full Pull ships from Seattle for $27/case with a discount so the total cost is a couple bucks under list, effectively free shipping.