Tag Archives: Flash Sites

Are Flash Sites & Daily Deals getting Wine Lovers Hooked on Cocaine .. I Mean Cheap Wine?

31 Jul

Uma Thurman Doing Cocaine Filthy Good Vino

Uma Thurman Doing Cocaine Filthy Good Vino

Nick Stock, rascal that he his, started a vibrant twitter conversation today. His open question to the Twitterverse:

“Are flash sites and daily deals training consumers to expect cheap wine?”

Having a passion for both Wine and Digital Strategy, there was no way 140 characters were going to be enough. If I had responded via Twitter, the answer would be: “Yes .. and No! It’s only just the beginning for wine online we’ve a lot to learn from todays experiment.

So, here’s the blog! (Check out the Crystal Ball Gazing at the end). First some background.

What is a Flash Site?

Flash Gordon

A website that sells a product at a significant discount, as much as 40-60% for a limited period of time, often 48-72hours.

What percentage of the market do online wine sales actually represent?

How many people are being potentially being influenced by a Flash Site Sales?

At a time when retail wine sales are struggling to produce annual growth of more than 3 per cent, the online wine sector has grown by 50 per cent in each of the past two years.1

Market estimates put the size of the online wine sector at $220 million, equivalent to about 5 per cent of the domestic retail wine market and it is expected to top $350m this year.1

I couldn’t find any numbers on the portion of these sales that are from Flash Sites, the volume or average bottle price.

In the end online is still only 7% of total sales. Significant yet not necessarily as huge an impact on behaviour as it could be.

One positive behaviour it is establishing is a comfort with buying wine online in Australia.

What is the Average Price Daily Deals / Flash Sites are selling a bottle of wine for?

Cheap Wine

In the US 3 sites that account for 63% of Flash Sales. The average price per bottle was $27.61 for the 12-month period, for well over 4,000 offers, with a 40% discount off the winery retail price. Most of the wine was domestic for the US (Napa & Sanoma) and from the 2007 vintage, about 3 vintages behind current.2

Demonstrating that bottle price is actually high in the US, but at a significant discount, all be it winery retail price not street price.

The numbers haven’t been collated for Australia. In Australia Greys Online suggest an average price point of $5 a bottle with sales growing at 25% annually and Crack Wines $10-25 a bottle growing at 20% each month.  Anecdotally Vino Mofo’s offer today (31 July 2012) included wine selling for between $10-22, historically more expensive wines have been sold, their growth is hard to quantify particularly with their recent acquisition by Catch of the Day and the huge lift in accessible audience it represents.1  Claimed discounts are high.

Wineries will eventually be able to determine if selling to Daily Deal sites is profitable and sustainable and if the Cocaine hit to Cash Flow was worth it. When supply and demand eventually shifts to be more favourable toward Wineries, Daily Deal sites, particularly deep discounters with no social layer, will see the number wineries willing to supply them dry up. If there’s no wine to sell and no established relationship between business and customer, customers won’t show any loyalty to their “dealer”.  Just like Uma Thurman in Pulp Fiction one day everyone will realise they’ve just snorted Heroin, not Cocaine!

Who is buying online?


If the buying patterns of Australian wine drinkers follow the US, Gen X and Baby Boomers with sufficient disposable income, the affluent, who have developed a “Taste for Wine” are the ones buying online.

Gen Y are buying for super-convenience, instant gratification, they’re in the Buy It, Drink It camp, consuming within 17 hours of purchase (85% of all wine consumed). Buying for the night at the nearest most convenient bottle shop.

Logic deems that, if 85% of wine, is actually being consumed within 17 hours of purchase, then that 85% must be purchased from a bricks and mortar store no online retailer is offering what would effectively need to be a 1 hour delivery promise.

Ironically this suggests that although they are the most technologically savvy:

  • They are the least likely to buy online. Waiting 3-4 days for delivery isn’t convenient and does not fit with their consumption habits.
  • They are not sufficiently affluent to buy cases, the default purchase quantity online (largely due to the current economic paradigm of transporting wine to the customers home / office).
  • They are less likely to have developed sufficient interest in wine at a base level and don’t drink it as an daily accompaniment to a meal.

What is the model? Transactional? Gamified? Adding a Social Layer?

Keynote: Seth Priebatsch of SCVNGR

Gamification is the introduction of Game Design, Game Technologies into a non-game context to make it more fun and engaging with the aim of influencing the behaviour of participants. In a retail context this might be to encourage opening email, visiting a website more frequently, spending more time on the website, developing relationships with more community members and ultimately buying more product.

The Daily Deal / Auction site represents a low level of gamification, by making a special offer, available for a short time, that you could “miss out on” or providing and opportunity for the customer to “win” a product.

The Social Layer supports an increase in the number of interactions with customers, between customers and the depth of these relationships to build a more engaged community.

Flash Sites are low level gamified at one end of the spectrum, some add a low level social layer with opportunities for customer reviews at the other end. Still pretty basic and not necessarily building great depth of relationship.

Online Wine Sales models are still in their infancy. Incorporation of Gamification and Social Layers have yet to reach their full potential. Models that are taking this to new levels have already been established both internationally and domestically. Things are looking promising … Stay Tuned!

What conditions have lead to the opportunity for heavily discounted daily deals?

The viability of Flash Sites is a simple matter of economic circumstance.

  • Exchange rates increase the available volume of cheap imports.
  • Oversupply issues domestically and globally.
  • Consumer confidence, reduced retail spend. Price vs Volume purchasing considerations.
  • Distressed Wineries / Overstocked wineries looking to shift stock and improve cashflow.

Hard to fight economic reality … in the short term at least.  Whilst these circumstances exist, flash sites will have the stock they need to prosper.

So .. Are Flash Sites Training Consumer to Expect Discounted Wine?

Yes … but, only through somewhere less than 5% of all wine sales (growing fast).

Those being influenced are mostly Gen X and Baby Boomers.

The positives.

A comfort with buying wine online is being established. This can only help future online models and open up opportunities.

Eventually supply of Cocaine / Cheap Wine will dry up and flash sites will struggle.

Being witness to these events will hopefully prompt wineries and retailers to think hard about how they can evolve their online presence to develop sustainable models through thoughtful design incorporating both game and social layers.

Future Trends – Crystal Ball Gazing

crystal-ball Filthy Good Vino

Time for a little crystal ball gazing! My predictions for the future.

Flash and Daily Deal Sites focused on a model of heavy discounting will struggle as supply eventually dries up and as wineries recognise the potential consequence for brand / lack of profitability in using these channels to sell.

Online models will continue to grow and evolve:

  • Designing for experience will trump base level transactional + low level gamified / low level social models.
  • Those with the strongest Game and Social layers will be the most successful with the most engaged communities.
  • Those who do design effective models will not have to rely on discounting.
  • Great service, time and effort spent developing meaningful relationships between the business and its customers, and, between members / customers of the community will be critical.
  • Game features that establish vested interests in maintaining a relationship, time invested in building a profile, competing in “The Game” will build a foundation for paying a “fair” price for wine.
  • Models creating financial efficiency, moving away from the three tiered supply chain, will offer reduced, yet profitable pricing whether perceived or real for the customer. A little cryptic, but, entirely possible.

The online share of the wine market will continue to grow, purchasing on mobile and tablet technology will increase.

Smart Clicks and Mortar Retailers will integrate digital touch points in their physical outlets. They will use their physical presence to create opportunity for a physical touch point for digital customers.

Smart Digital Retailers will establish physical and hybrid touch points for their community.

Wineries and Clicks and Mortar Retailers in general will remain laggards in the adoption of Digital Strategy to build communities around their business and only touch the surface of the potential that exists. Getting a Facebook Page because everyone else has one is not the answer.

A few innovators will realise that they do not have to rely only on the old three tiered model. That they can build a model to grow direct sales, with a strong Game and Social Layer. They will prosper.

These wineries / retailers will take ownership and spend the time and effort on developing meaningful relationships with a vibrant community who:

  • Care about what they do.
  • Who they are.
  • Value the experience, product and exceptional service being offered.
  • Will pay well for it.

Generation Y will start to come into their own in the next 5 to 10 years as their level of affluence increases and buy both more wine and a higher percentage of that wine online as the opportunity to look beyond instant gratification is realised through wealth.

Baby Boomers will buy less as they age.


1. Speedy, B. “Online wine auctions hit the spot” The Australian June 23, 2012.http://www.theaustralian.com.au/business/companies/online-wine-auctions-hit-the-spot/story-fn91v9q3-1226405976756 viewed 31 July 2012
2. Andrejczak, W “Wine flash-deal business is maturing – New middlemen emerge in U.S. wine market” The Wall Street Journal, Market Watch. 30 May 2012. http://www.marketwatch.com/story/flash-deal-wine-sites-mature-2012-05-30?link=MW_latest_news viewed 31 July 2012.