Amazon's New Online Wine Shop: Industry Friend or Foe?

The world’s largest e-commerce site began its third foray into the world of wine Thursday. Amazon.com says customers can now order online from a list of nearly a thousand wines from around the country.

KQED News anchor Stephanie Martin spoke with reporter Cathy Bussewitz, who covers California’s wine country for the Santa Rosa Press Democrat, about the online retailer's  latest move into another formerly offline commodity.

Edited transcript

Stephanie Martin:  Amazon tried to do this in 1999 and then again 10 years later, and both efforts were very expensive failures. What went wrong ?

Cathy Bussewitz: Well, at the time  there were and there still are today a lot of regulatory hurdles for shipping wine directly to consumers. One of the main things that really changed is that about a year ago some of those regulations were relaxed, so a third-party provider like Amazon can now ship direct to consumers, as long as the winery itself remains in charge of the sale. That sort of paved the way for regulators to get back into the scene. Stephanie Martin: The public relations director at Rodney Strong Vineyards, Robert Larson, really summed up the complicated nature of wine shipping when he said to you, “It’s a whole lot easier to send a gun to another state than it is to send a bottle of wine.” Even with the change that you just talked about, it’s still complicated, isn’t it?

Cathy Bussewitz: It’s absolutely still complicated. And you’ll see, Amazon, even with their launch, is only going to be shipping to 13 states so far. So while this is a big change for the wine industry and for wineries’ ability to reach to states where they might not have much of a brand presence, it’s really the beginning phase.

Stephanie Martin: What’s the buzz in the North Coast wine region about Amazon’s move into the business?

Cathy Bussewitz: Well, I think people are really intrigued by it and excited about what it might mean. And I think it’s also a little early to tell how this is really going to change things. But there’s a few large Sonoma County wineries that are participating in this, and Napa of course. But it’s not obvious that there’s a huge presence of North Coast wineries that are participating at this point, so it’ll be interesting to see how it unravels.

Stephanie Martin: Who do you think is likely to benefit the most?

Cathy Bussewitz: I think the perception is that it really depends on how a winery has structured its business. The shipping is going to be quite expensive for them. You’ll see that the customers who buy wine through Amazon.com are going to get good deals on the shipping, but the wineries are having to handle the cost, so they’re picking up the slack in terms of those discounts.

Stephanie Martin: And who has reason to be concerned?

Cathy Bussewitz: I think some people would say that distributors have reason to be concerned. There’s a three-tier system that wineries have to navigate: they have to typically sell through a distributor and then a wholesaler and then a retailer. Amazon selling wine online sort of cuts out one step of the process, but you know some seem concerned about that, and others feel that it’s not really going to eat away at distributors’ business.

Stephanie Martin: And ultimately, what’s the benefit to consumers for using Amazon?

Cathy Bussewitz: They have an interesting setup on their web site. If you’re looking for Russian River Chardonnay, you can literally go through their web site, choose Sonoma County, choose a region, and search that way. So, they are providing an interesting way of shopping, in which you can really hone in on what you’re looking for.

And, it sounds like the shipping is pretty good, too. So people who want to ship some wine for the holidays to their family, as long as their family lives in one of those 13 states, they’ll maybe have an easier time doing that and pay less for shipping.