Issue link: http://read.dmtmag.com/i/402796
2 2 V I N E YA R D & W I N E RY M A N A G E M E N T | N o v - D e c 2 014 w w w. v w m m e d i a . c o m ineries are using different strategies to cope with consumer concerns regard- ing the cost of shipping the wine they have purchased when visiting tasting rooms. The rates for UPS and FedEx show that the basic cost of shipping a case of wine across the United States is just a few cents shy of $60. This doesn't include the cost of packing materials and the time of an employee or fulfillment company to ready the shipment. S p e c i a l s e r v i c e s s u c h as next-day delivery can double the fee. W i n e r i e s h a v e d i f - f e r e n t p o l i c i e s a n d p r o c e d u r e s r e g a r d i n g d i s c o u n t e d a n d f r e e shipping. If you're con- sidering this, it's impor- tant to look at the costs incurred, especially on low-margin wines. Free or discounted shipping is a perk that a number of wineries offer when t h e y s t a r t w i n e c l u b s – inducements to join. Think carefully before you do this, because as the club grows, the loss of revenue may be more than you want to absorb. For example, let's say you offer dis- counted or free shipping to your wine club members. You have 1,000 members in your three-bottle club and 700 members in your six-bottle club. Here are the average costs of shipping and the cost to you if you ship for free or at a 25% discount: Average cost to ship three bottles – $26 Average cost to ship six bottles – $38 Winery cost with free shipping to all club members for one shipment: Three-bottle club – $26,000 Six-bottle club – $26,600 Winery cost with 25% discount: 3 bottle club – $6,500 6 bottle club – $6,650 "Free or subsidized shipping sounds great when you are growing your club, but you can see the lost revenue begins to add up," said Kathy Mooney of Wine2 Con- sumer, a Healdsburg, Calif., company that manages wine clubs for wineries. Mooney added that once such benefits are offered to customers, they likely will become unhappy if the benefits are taken away or reduced. Be prepared to provide shipping benefits for the long haul, to avoid losing wine club members. To ease customer complaints about the costs of shipping wine, Mooney sug- gests that tasting room personnel explain that the winery doesn't make any money on shipping and that carriers establish the pricing. Also encourage customers to ship in case quantities to save on freight costs per bottle (this also bumps up the number of bottles sold). And if you sell primarily SHORT COURSE + Shipping wine to consumers is expensive – approximately $60 per case for coast-to-coast delivery. + Make sure tasting room employees explain that the winery doesn't make any money on shipping. + Wineries considering offering cus- tomers free or discounted shopping should weigh the economic loss ver- sus potential increase in sales. + Check the regulations in your state or province to ensure that it's legal to ship wine for free. Wineries should do the math WINE WISE MARKETING ELIZABETH SLATER Shipping Discounts – Good Idea or Not? Offering free or discounted shipping can be costly for wineries. Photo: Thinkstock