That’s a staggering amount of seed capital for a dot-com.
But they aren’t a dot com.
The original business was started by a few guys who jumped into online sales during the dot-com boom in the late 1990s, hoping, like people in the pet food industry, grocery industry, and so many other industries to emulate Amazon. And remember, back then Amazon was only in books. The wine folks immediately found out that wine was going to be unlike books because books had already been upended by big box stores so couldn’t mount any kind of coherent opposition, but wine was regulated as alcohol and sales could not be easily scaled up.
Remember that in 1998 and 99 and 2000 it was pretty easy to find money for any hair brained dot.com idea. They basically went bankrupt and sold out to another company that had also started trying to sell wine online. I don’t remember exactly how many mergers and acquisitions occurred but basically a number of companies who planned to become the Amazon of wine were eventually picked up out of bankruptcy and combined by some Wall Street guys. The name Wine.com had been acquired at the first bankruptcy so that was given to the combined entity.
Meantime, little upstarts like Gary V were figuring out that they could sell wine online without being a “dot.com” company. His model made a lot more sense.
Somehow wine.com has continued. I think it’s because of the name. But they are doing OK these days.
If you can make sense of this Wikipedia summary of the three foundings, the multiple founders, the mergers, bankruptcies and turnarounds, you’re smarter than me:
The company now known as Wine.com was originally founded as Virtual Vineyards by Robert Olson in Los Altos, California in 1994 with co-founders Master Sommelier Peter Granoff[1], and Information Architect Harry Max. Virtual Vineyards sold its first bottle of wine online via its custom-coded, secure, on-line shopping cart January 24, 1995 and went into full production a couple of weeks later[2]. The current Wine.com business was founded by Mike Osborn in Portland, Oregon as eVineyard in 1998.[3] In 1995, David Harmon founded wine.com and in 1999 sold the information site Wine.com to Virtual Vineyards for over $10,000,000. In 2000, VirtualVineyards.com and WineShopper.com merged under the Wine.com moniker.[4] In the spring of 2001, eVineyard purchased the assets of the combined business prior to their bankruptcy and became known as Wine.com.[5] After being acquired, Wine.com moved its corporate offices to San Francisco, CA.[6] In 2006, Rich Bergsund joined Wine.com as CEO, seeing the company through a financial turnaround.[7] According to Internet Retailer, the company has grown to become the biggest online wine retailer in the United States.[8] Wine.com is majority owned by Baker Capital, a New York–based private equity firm.[9]
I remember WineShopper. They were around for like a minute.
Don’t know Baker but I guess they’re the original Wall Street guys who figured they could make a business out of it? But I thought they sold out years ago. Or maybe they tried but couldn’t find buyers?
Interesting articles Jeff. I can’t believe that they are still getting those kinds of investments. Wine Searcher has pretty much made it pointless to try to become THE online wine retailer.
BTW, did anyone notice that Amazon is opening a second brick and mortar store for spirits delivery as part of Amazon Prime? It will be a distribution center and also a walk-in.
I’m thinking that spirits is going to be where the real battles are. People are much more brand loyal than wine buyers, the margins are better, and the inventory doesn’t age out.
