Put a Cork in Online Wine
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Jeff Bezos seems to be running out of retail categories to move Amazon.com into. (What's next? Puppies? Frozen steaks? Escort services?), In its latest expansion, the web's largest retailer will become another place for you to not buy wine from online.
The story of the online wine business and the arcane interstate commerce laws that continue to thwart it is a long and boring one, so we'll try our best to summarize. Eric Asimov of the New York Times offers a more detailed examination here.
About half the states in the country allow interstate wine shipments. A 2005 Supreme Court ruling struck down bans preventing shipments from out-of-state wineries, but wine retailers didn't benefit from the ruling.
Online wine merchants face many hurdles. It's still not possible to ship legally to many states, and for others, it requires investment, such as having a brick-and-mortar etail outlet in that state.
Naturally, Bezos is unfazed. Amazon.com is reportedly working with a non-profit group called Napa Valley Vintners that is helping the 315 wineries it represents learn how to sell wine through Amazon.
Given that Amazon will be doing business directly with vintners, perhaps the online retailer could argue that the sales constitute transactions between customers and wineries (rather than a retailer); that would get them around the state shipping bans.
But reports indicate that Amazon.com plans to ship from only 26 states, so it appears that for now at least Amazon is playing it safe.
But all legal issues aside, even if online wine sellers were able to ship to all 50 states unimpeded, Amazon would still have to face the fact that people just do not seem to want to buy wine online.
Reuters reports that e-commerce accounts for only 7 percent of the $2.8 billion of wine is sold through retail formats in the U.S. -- that amounts to a $196 million opportunity right now, split between a number of players.
And it's not for reasons Amazon.com is well-positioned to fix, like pricing, or selection, or shipping speed. Dedicated online wine sellers like Wine.com and Vinfolio.com are sophisticated operations with good execution, and yet they continue to face the problem of courting customers.
Wine buying isn't like book buying, where you're likely to have a specific product in mind from the start. How often, when you buy wine, do you go in looking for a specific bottle? Can you even name three specific vineyards and vintages that you like?
Most of us have little enough wine literacy that the limited selection and personalized service of a neighborhood wine store is an ideal buying environment. We are not sophisticated enough judges of pricing to turn to a Web retailer for better value, and we're more likely to need a bottle of wine an hour from now than to plan the purchase in advance.
Of course, all of this goes out the window in the case of an experienced wine buyer, who may very well be looking for a specific bottle and will be thrilled to let his or her fingers do the walking to find it -- no carrying heavy cases of wine, no calling around to wine stores, easy price comparisons across sites.
But unfortunately for Amazon.com, and fortunately for the rest of us, wine snobs come in limited quantities.
DOJ Hires Antitrust Lawyer in Google-Yahoo Case
News from Portfolio.com
The Department of Justice is taking the Google-Yahoo ad pact seriously.
Reuters is reporting that the Department of Justice has hired top antitrust lawyer Sandy Litvack to consult on its investigation of the deal between the two Web titans.
The appointment of Litvack, who was the Justice Department's chief antitrust lawyer under President Jimmy Carter, as well as vice-chairman of Walt Disney Co., suggests that the feds are ramping up their case against the Yahoo/Google pact.
In April, Yahoo and Google began experimenting with the deal, which would allow Google -- the web search leader -- to begin to serve ads on sites run by Yahoo, the number two search company. For months, both companies have insisted that the deal is not anticompetitive and expressed confidence that it would ultimately pass regulatory scrutiny. The companies stuck to their guns late Monday.
"We have been informed that the Justice Department, as they sometimes do, is seeking advice from an outside consultant, but that we should read nothing into that fact," Yahoo said in a statement. For its part, Google issued a statement saying, "We think it would be premature for regulators to halt the agreement before we implement it and everyone can judge the actual impact."
Yahoo estimates that the deal could pump an additional revenue of $800 million into its coffers.
Microsoft, the number three Web search company, opposes any deal between Google and Yahoo, arguing that it would make the web ad market less competitive. The Justice Department may be preparing to make that very same case.
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