Hope they celebrate with more coupons 
So we’re not unethical scum taking advantage of a poor, incompetent online retailer but actually partners in helping them increase net revenue by 283%!
Can you explain what you’re talking about?
Its only right that they give us more coupons so they can keep making $$
Hi Wes. I was just stirring the pot. There was a big hullabaloo with some wine.com referrals that people were taking advantage of and spirited discussion of whether the behavior crossed an ethical line.
Without doing any due diligence at all, I will opine that wine.com is, on the face of it, a much better investment than Lot 18 ever was. For that one it was impossible to conceive of any way they would ever be profitable, or even attractive to an acquirer. They were really good at burning cash though.
Speaking of referrals and coupons, they are trying to stiff me on my 10% Rakuten CB on a $4k BDX futures order saying they will pay it “on shipment” i.e. in 2022 even though they collected payment already last month. So I wouldn’t feel bad about referrals or whatever else you can get from them.
sadly the 283% revenue growth came in a quarter with none of the good coupons. Likely mostly pandemic induced stay-at-home growth which may hurt chances of getting more coupons in the near term.
If the revenue growth is from selling the ‘free shipping’ deal, it could be argued that is actually a liability. Taking in $50 and then having to wear all those FedEx costs for the next year - assuming they honor it - is something that I suspect in the fullness of time going to be realized to be a liability.
And given how hard they push StewardShip, and how much its incentivized via portals, I’d bet that is what is happening. VC firms might value that higher since its ‘subscription’ sticky revenue rather than transactional revenue.
But as long as the deals are there, hit them hard.
This is the only way they could likely justify such a valuation based on my basic knowledge of wine retail/online margins. Much higher multiples for MRR.
Did I wake up in 1998?
Let me start by saying there’s no way I personally would invest in this right now, it’s completely speculative. However, if I were a VC type, it’s something I would look at. Wine.com strikes me as very much like an on-line version of Total Wine. The generally high pricing, with the aggressive use of coupons. A wide selection where you can find (to use a Munger term) chocalate among the rabbit turds. The on-line “sommelier” who you can easily ignore, or not, just like the folks prowling the aisles at Total. The multi state footprint.
It’s early days, but it is quite possible they are the ones who will figure out how to scale selling wine and liquor on line at a national level - something AMZN has attempted repeatedly, failing miserably each time. If they succeed, they are worth a lot more than $1 billion.
Regarding the comment above about eating the shipping costs for Stewardship members, if they really can scale how do you think those costs compare vs. the brick and mortar stores staffed with all those people prowling the aisles to serve the same customer base.
They’re looking to raise money at this valuation, and only looking to raise 50-75mm. This is a bit like when NFL agents brief the media about player contracts - the full value is a fund headline grabbing number, but it’s not terribly meaningful.
Yes, there’s some hype involved, but the $1B number is definitely meaningful to the folks putting up the $50-$75M. All things equal, they lose money unless the company hits that value. It’s also a benchmark for future rounds.
Yes, I understand the concept of valuation for all these reasons, but it’s only really relevant to shareholders and no one has actually bought at that valuation.
Who wants to start a Berserker fund to take care of this funding round? 
It can be argued that they already have - you press a button, pay and wine shows up at your front door…in quite a few states. They have excellent ingredients for being a national success but they suck at customer acquisition and brand marketing.
Amazon didn’t fail per se - they gave up. When they were selling wine, they were making money on it. They wanted to sell a lot more of it and to do that they wanted to change the laws. From what I heard at the time, the overhead for “rocket prep” (lobbying/legal/fighting regulators in multiple states) versus revenue opportunity (total available market) was not an attractive proposition. Their internal “eat what you kill” mentality is strong so they kept trying. They stopped throwing money at it after they acquired Whole Foods.
You’re assuming people want to go to a brick-and-mortar vs online aggregator (wine.com) versus individual winery (online or offline) to buy wine. This is where it gets more complex - what kind of people, what kind of wine, etc. Nielsen Beverage reported that retail store sales by volume for 52 weeks through October 2019, were down 1.4 percent from prior year. Most of the wine sold in brick-and-mortar is under $20 and produced by seven largest California wineries (Gallo, Constellation, …). These seven account for about 70% total annual wine sales in US. $20 and above is a luxury wine segment in industry terms. Where do you go to buy a luxury product? It depends.
What did wine.com sell during their hottest pandemic-driven quarter ever ending on June 30 2020? From CellarTracker, top 10 wines sold by wine.com during this time period along with average cost reported by CT for 750 ml bottle:
2019 Château Pontet-Canet (France, Bordeaux, Médoc, Pauillac) 1.1% Bottles purchased (200): $87
2016 Produttori del Barbaresco Barbaresco (Italy, Piedmont, Langhe, Barbaresco) 0.8% Bottles purchased (153) / Remaining (145): $38
2019 Cave d’Esclans Whispering Angel (France, Provence, Côtes de Provence) 0.7% Bottles purchased (124) / Remaining (49): $20
2017 Petra Zingari Toscana IGT (Italy, Tuscany) 0.6% Bottles purchased (118) / Remaining (81): $15
2016 Marchesi Mazzei Chianti Classico Ser Lapo Riserva (Italy, Tuscany, Chianti) 0.6% Bottles purchased (105) / Remaining (79): $24
2016 Tenuta di Nozzole Chianti Classico Riserva (Italy, Tuscany, Chianti) 0.6% Bottles purchased (103) / Remaining (81): $19
2010 La Rioja Alta Rioja Viña Ardanza Reserva, Selección Especial (Spain, La Rioja) 0.5% Bottles purchased (98) / Remaining (71): $31
2016 Drouhin Oregon Roserock Pinot Noir (USA, Oregon, Willamette Valley) 0.4% Bottles purchased (69) / Remaining (53): $31
2016 Antinori Tignanello Toscana IGT (Italy, Tuscany, Toscana IGT) 0.4% Bottles purchased (69) / Remaining (67): $105
2017 Viña Robles Cabernet Sauvignon (USA, California, Central Coast, Paso Robles) 0.3% Bottles purchased (62) / Remaining (36): $20
Not a single white or bubbles in top 10. Pontet-Canet is an en primeur buy, leaving Antinori as the only truly premium wine on the list. Everything else is in $20-30 range. Antinori aside, the dominance of Italian wine on this list is (in my opinion) due to Italy being excluded from tariffs. The impact of 25% tariff is proportionally and emotionally higher for a frugally-minded consumer in a lower dollar range. For higher-cost product, the price increase can and will be absorbed by the consumer.
My assertion: the largest gap in value between online aggregators and brick-and-mortar retail exists in this $20-$30/40 range for product imported from outside of US. I define value as (perceived quality + customer experience) / price. For me customer experience comes down to product selection, availability and delivery terms. If my local retailer had all of these bottles above in stock at the same coupon-discounted cost as wine.com, would I schlep there instead of wine.com if pandemic wasn’t a factor? For me personally, the answer would be “perhaps once in a while”. Assuming equal cost, I much prefer buying wine online.
Really, the only advantage of a local retailer over online is product discovery + advice, the very raison d’etre of this board. wine.com is trying to close this gap with “chat with a sommelier”. If this is truly the only gap, then raising the cash and hiring more staff who know how to correctly pronounce Pontet-Canet isn’t a big hurdle to jump over.
More to the point of high valuation and whether it’s justified, if wine.com is doing so well what’s happening with other online-only aggregators. Are they all asleep at the wheel and letting wine.com take market share from them or are they all having massive quarters too? From Cellar Tracker for the same quarter ending on June 30 2020, it does look like they’re all doing well but losing to wine.com:
Wine.com 0.8% Bottles purchased (18,269) / Remaining (13,489)
JJ Buckley 0.6% Bottles purchased (13,713) / Remaining (13,103)
Vivino 0.5% Bottles purchased (10,888) / Remaining (8,445)
Wine Access 0.3% Bottles purchased (6,169) / Remaining (5,111)
If you include other online services that move product but are not pure aggregators and add retailers with significant online channel, then top 14 looks like this
Total Wine 0.9% Bottles purchased (19,382) / Remaining (12,910)
Garagiste 0.8% Bottles purchased (18,701) / Remaining (17,214)
Wine.com 0.8% Bottles purchased (18,269) / Remaining (13,489)
Last Bottle 0.8% Bottles purchased (17,842) / Remaining (13,599)
WTSO 0.7% Bottles purchased (15,505) / Remaining (11,789)
JJ Buckley 0.6% Bottles purchased (13,713) / Remaining (13,103)
Wine Society 0.5% Bottles purchased (11,689)
Vivino 0.5% Bottles purchased (10,888) / Remaining (8,445)
K&L 0.4% Bottles purchased (9,854)
Wine Library 0.3% Bottles purchased (6,306) / Remaining (5,070)
Wine Access 0.3% Bottles purchased (6,169) / Remaining (5,111)
Zachys 0.3% Bottles purchased (5,978) / Remaining (5,619)
Envoyer 0.2% Bottles purchased (3,821) / Remaining (3,706)
WineBid 0.2% Bottles purchased (3,712) / Remaining (3,145)
Garagiste - no matter where you stand on Rimmerman, what a business! Even discounting the fact that Cellar Tracker is not an accurate picture of all bottles sold, the fact that he is moving as much product as wine.com is crazy. Wine Society is direct-to-consumer done right online. Experience matters, especially to a younger audience. Vivino used to be complete crap but now a decent contender. Just a mobile app, eh? Wine Library despite having lost its glorious leader built so much brand that it’s still rolling at a decent clip.