0
0
The main reason why most wineries experience growth stalls is not bad wine. It’s that the back office can’t keep up with the front of house selling. Once a winery adds national shipping, a wine club, and a tasting room to the mix, weaknesses in their operation quickly directly translate to cash flow.
1. Fragmented inventory across every channel
For many growing wineries, the biggest pain point is overselling. A customer purchases the last case of your 2021 reserve online, only for that same case to have been promised to a tasting room visitor who swiped a credit card twenty minutes before. Your point of sale system, your ecommerce platform, and your wine club software don’t talk to each other.
The solution isn’t complex in principle, but it is in practice. You require one inventory ‘truth’ – one system that instantly updates inventory counts across all sales channels. This is more difficult than it sounds. Each unique vintage, varietal, library release, and ’21 holiday gift set amounts to what’s known as a “stock keeping unit” or SKU. A mid-sized winery with sufficient diversification to compete in a crowded market might have 80-120 active SKUs at any given time. And the more SKUs you have, the greater the chance for human error when monitoring all of them in one place.
2. Compliance isn’t something you can manage in a spreadsheet
It can be quite challenging to ship wine to customers in different states, as each state has its own regulations regarding direct shipments of alcohol. Some states don’t allow direct shipments at all, while others limit the quantity that can be shipped to a single customer in a year. Additionally, you need to pay the appropriate state excise taxes.
This process can quickly become unmanageable as your business scales. Keeping track of all the different rules and regulations, as well as calculating and reporting all the necessary taxes, could become a full-time job. And failing to do this correctly can result in hefty fines and other consequences.
3. Shipping is part of the product experience now
The overhead of managing high-priced customers is where a lot of brands burn the most margin. White glove allocations are wasted if they arrive on an uninsulated truck that’s been sitting for hours outside the warehouse in Phoenix. It is not enough to build the price of cold chain shipping into the order, especially when your list is already doubling as your burdened overhead allocation.
Are your $40 reserve club bottles really more profitable than the wholesale you might get if your reserve customers could be convinced to buy most of their wine at retail? Would you rather ship 450 cases at 8% margin or 75 cases at 50%? At the end of the day, all the customer knows – and all they care about – is whether the bottle they just opened delivers the experience they expected.
4. The shift to digital-first sales
Prioritizing production over sales may have been right in the past, because sales were happening through distributors or at the tasting room door. Now your fastest-growing customer segment is buying on mobile and finding you through social, somehow this approach no longer makes sense.
This isn’t about tossing aside what’s unique about a winery – it’s about showing up where your customers are already looking for you. Tons of younger wine buyers will research purchases online before ever setting foot in your tasting room, and plenty more won’t ever make that trip. An efficient ecommerce “store” becomes the main source of new business.
For wineries in the process of building that online experience, the Pacific IQ wine ecommerce guide will run you through exactly what you should be looking for in a web dev team, and what separates a high-performing storefront from one that’s killing you every month with a thousand little leaks.
5. Wine club operations require more rigor than most wineries apply
Wine clubs create a steady stream of revenue, and the lifetime value of a club member who regularly buys wine is much higher than that of a one-time buyer. But recurring billing is the simple part. Batching shipments, processing failed credit cards, handling customer holds and cancellations, and forecasting the right amount of inventory to produce per release cycle is a logistical nightmare that often gets out of control much faster than up-and-coming wineries expect.
Churn prediction is a highly effective, underutilized weapon here. You have years of cancellation history on previous customers that can be cross-referenced with current ordering frequency and engagement clues to tell you who likely to leave you next. That data should be used for your demand forecast, so that you aren’t left with too many cases at a release and customers you’ve already billed go unfulfilled, or vice versa.
If you’re a larger winery, a good production planning module in your ERP that is directly connected to club management is not a nice-to-have. It’s the difference between knowing there’s a problem before it’s too late and constantly losing customers through operational errors.
