2020 Winery DTC Vendor Update
Welcome to our third year of building this Winery DTC Vendor Update releasing the same day, and in support of, the Annual SVB State of the Union report. This project is a tremendous amount of work, and only possible thanks to Erica Gomez who has been a fantastic partner to help compile, organize and design our new format (which, hopefully, has found its final evolution into this excellent progressive flywheel). Since we’ve adapted the shape over the last few years, we’ve made an ultimate and straightforward hosting solution for it at WineryDTC.com. I can tell you that we had giant aspirations of adding 24/7 customer reviews, feature comparisons, and price bands per vendor. A good goal for next year. This year I’ve also added context about notable events, overarching insights or macro changes I’ve seen over the year.
The overarching theme is that we are finally starting to approach the modern age of Winery DTC. Systems, albeit slowly, are getting more robust. There are more specialty vendors than ever before, and the skills of these companies often improve year over year (albeit some slower than others). As I’ve mentioned the last two years, we are also over-saturated in the companies that power transactions for the quantity of US wineries they can serve. This is contributing to the slow progress of this channel. So, let’s talk about what happened in 2019.
Bring In the Talent
Without question, one of the highlights of the last year (and maybe the previous decade) came from Wente Vineyards and Trinchero Family Vineyards. They both invested in bringing two incredibly talented digital professionals to help supercharge their DTC programs. In my 20 year career in wine and DTC, I’ve never seen two major companies bet big on outside specialists and empower them for success. We should all be simultaneously cheering them on but also watching and learning from their efforts.
Unite the Tribes
I know I’ve said this in previous posts, but the collection of vendors servicing DTC impedes the speed of innovation (outside of Programmer-CEO’s like Andrew Kamphuis from Commerce7). As such, it’s my recommendation that regional associations, groups of wineries, etc. work together to choose a single group of vendors, collaborate on limited meaningful feature requests, and hold that vendor accountable to uptime those deliverables for the year. Continual fragmentation of the vendors is what inhibits their ability to fulfill our industry’s needs. Since our total addressable market is small (US ~ 10K), the needed innovation will only occur with a significant winery cohort supporting 2–4 vendors. On the SVB webcast, there were lots of conversations about collaboration to help empower the industry to succeed. Focusing on collective vendor bargaining is one of the most accessible and impactful paths to improving winery market access and sustainability.
Testing Outside Solutions
Out of frustration, quite a few wineries or wine groups have moved to explore enterprise non-wine specific solutions (The Force, Magento, Shopify, WooCommerce, etc.). Most of these explorations will fail miserably. The implementers and platforms, while they’ve exponentially improved, will always be anchored to the industry-specific platforms that they need to integrate and their inherent limitations (fulfillment, compliance, etc.). Unless you have the caliber of a Justin Noland on staff to manage the implementation, assist with integration points, and build a budget/team for the continual maintenance and improvements of the unique features and integration points, this is currently a risky proposition. Again, most of the companies choosing this route will lose hundreds of thousands of dollars to fail.
I can certainly understand the wineries’ frustration. Most of the vendors had minimal progress in R&D, approximately four vendors are going through platform redevelopment with only VineSpring completing their new system and Commerce7, while the #1 in R&D and the most advanced features, also is still catching up with some of the features that were previously built by Andrew with the original Vinsuite and Vin65/WineDirect. That being said, Commerce7 led the industry in new and different features.
Some of the other more reputable companies are doing interesting things like investing in partnerships (VineSpring) or in stand-alone features outside of their platform that benefit the industry (Truvi’s shipment manager).
API’s & Webhooks: The Promise and the Myth
In this new era of DTC platforms, if they are not exposing quality API’s or Webhooks, they are limiting a winery’s ability to use best of breed solutions, connect your commerce platforms to other solutions (marketing automation, email service providers, and more). If you don’t know what an API is, then think of it as a socket waiting to plug into another software tool. In the wine industry, the leader truly focused on powering these two key features is Commerce7. But other vendors that also offer good API/Webhooks include VineSpring, Truvi (API only) and Figure (API only). Some companies, BLoyal, see it as a revenue source and charge the winery an API fee per installed software (e.g. you have four POS systems, you pay 4x the API fees). Unfortunately, while the possibilities of connecting tools for a fantastic connected and seamless commerce stack, and this is key to the future of wine, the reality is that it’s a daunting task for most wineries. The dissonance is palpable as the vendors above, powered with technical acumen and the desire to better empower the wineries, don’t understand why the majority of wineries looking at these solutions don’t have the resources (human and financial) for integrating solutions to these API’s and maintaining them to have a frictionless business. The dearth of developer resources and the fee structure to support and sustain building these integrations is one of the most significant inhibitors to successfully unlocking the full potential of these platforms.
Missing Category of CRM
CRM has eluded the wine industry for DTC. If you ask wineries who their CRM system is, they’ll point to WineDirect, Vinsuite, Commerce7, etc. In reality, those systems have some CRM functionality but are not the core component as they’re built to be a cross-channel (four channels: e-comm, subscription, POS, telephone) transaction tools. A few wineries will point to a Salesforce implementation, generally smaller wineries that have concierge based sales organizations. As of yet, there is no significant volume DTC wine program with a successful Salesforce implementation. The good news is that by missing the CRM wave, we’ve leapfrogged into a more critical epoch of the Customer Data Platform, or CDP. Google it; we’ll be talking a lot about it this year and in next year’s report.
The Map for CX (Customer Experience and Engagement)
Historically wineries mapped experiences based on location (tasting room, e-comm, phone) or membership (club, non-club, tier of club) or active vs non-active. The best wineries are now mapping experiences for each buying cohort across touch points (web, social, e-comm, club, etc), through marketing communications (messaging, channel and frequency), benefits (amenities, discounts, greetings, shipping, and more) and who/how to lift consumers from one cohort to the other and how to slow their decline down buying cohorts.
Reports To Live By
Another positive contribution to the category is the addition of three new reports for understanding the economic health of the channel and bench-marking your DTC business against the business and your peers.
Of course, there is the inspiration and why we do our small annual DTC update, the seminal State of the Union report from SVB Bank and Rob McMillan — https://www.svb.com/wine-report
Not to mention their secondary DTC focused release and annual Webcast — https://www.svb.com/blogs/rob-mcmillan/2019-insights-for-successful-consumer-wine-sales-videocasts-part1-and-part2-on-demand (this year featured Lisa Kislak and Tammy Boatright)
And there’s the SOVOS/Shipcompliant report — https://www.sovos.com/shipcompliant/resources/wine-dtc-report/
But three others joined the mix:
WineDirect with a solid report similar to Sovos/Shipcompliant — https://info.winedirect.com/hubfs/WineDirect%202019%20Direct-to-Consumer%20Sales%20Report.pdf
Wine Glass Marketing all about email marketing in the wine industry — https://www.wineglassmarketing.com/Blog/Download-2019-Email-Benchmark-Results?
And Commerce7 with one of the more innovative reports — how a consumer interacts with digital and buy DTC — https://commerce7.com/consumer-experience-2019.
One Certification to Rule them All
And finally, to round out the positive additions to the category, VingDirect built out a distributed, on-demand learning platform and added a DTC accreditation program to certify winery staff: https://vingdirect.com/online-class-options/. While there are other educational programs, this is the first cost-effective, employee-friendly program designed for DTC Professionals and built by highly respected operators, the VingDirect team, and the undisputed Queen of Winery DTC, Tammy Boatright.
Some notes about the how we include and organize DTC companies in the graphic and in this post:
Only live vendors that have actual customers are included.
We’ve started to add non-wine specific vendors if they are in common use with 10 or more wineries.
We include international vendors if they serve the US winery market.
This year we’ve collapsed, expanded and added categories but the entire vendor list moved from 94 to 109.
Just five vendors live in more than one category (WineDirect in Fulfillment and Full Stack Commerce, Quickbooks in Accounting and On-Premise POS, AMS Accounting and Full Stack Commerce, Commerce7 in Full Stack Commerce and Reservations, and VingDirect in Strategy and Coaching).
There are a whopping 19 vendors in the DTC Full Stack (E-comm, WC, POS) category. Overall this category and the entire DTC Commerce arena (On-Premise POS, E-comm & Club, Full Stack solutions) has stayed steady at 28 vendors. There seems to be no signs for vendor consolidation.
We’re seeing growth in the DTC Services arena but it is still lean for the industry’s need for expert execution of services. This dearth of vendors poses a real problem for the industry.
An Example Stack of Vendors:
Because many wineries asked, we took a smattering of vendors that would easily integrate and work well together to show what an example tech-vendor DTC stack might look like. Your results may vary. Next year we’ll try the same approach with other vendors that utilize Restful API’s.