With a 25 year history, WineBid is the oldest and largest online wine auction site. The original wine re-commerce platform, Russ tells us about the auction process from the buyer and seller perspective as well as all the data they collect and display for the wines. This includes innovations such as a 360-degree bottle shot, price history charts, and new functionality like their customized shipping feature. He even spills the beans on a few tips and tricks to getting the best deals on WineBid!
Detailed Show Notes:
- Russ’ background - software and e-commerce at realtor.com, myfico.com, gazelle.com, and also had a vineyard in Temecula, California, growing Syrah and Tempranillo
- WineBid - 25 years old, based in Seattle with operations in Napa, the oldest and largest wine auction site
- Weekly auctions - open at 7:15 pm PST on Sundays, closes at 7 pm PST the next Sunday
- All items open at the same time
- Pro’s get 1st 5-10 minutes to view and place bids
- What doesn’t sell rolls into the following week
- Now introducing some wines mid-week, with most wines going in one week
- Set good reserves upfront
- WineBid Sunday Night is "appointment internet" - people watch the auctions' final minutes with a good bottle of wine, watching some wines get bid up
- Can monitor all bids at once with WineBid
- For Sellers of wine
- Consignors are mostly private individuals
- Most sales are for $10,000-$1M+, ideally $100+ average bottle value
- Sellers send their list and get an estimate
- WineBid does the appraisal and after agreeing with consignor, ships wine to the Napa warehouse
- Wines are inspected, authenticated, and photographed
- Once sold, sellers get a check or electronic wire transfer
- As part of an estimate, for larger cellars, WineBid will help catalog and pre-inspect on-site
- Reasons people sell wines
- As in many businesses, the 3 D’s - divorce, debt, and death
- People also have their tastes change and swap out what’s in their cellars
- They move and want to downsize their cellar
- Spouse/partners - may force sales before they can buy more
- Wine as an investment - WineBid was featured in an article in the Economist, conducting a 15-year analysis
- Basket of Burgundy wines would have outperformed the S&P 500
- Basket of Bordeaux wines would have been close to the S&P 500
- Need to think of total transaction costs- transactions costs higher for wine as an investment, as a physical asset
- Consignment vs cash buyout for wine sellers - generally make more money consigning and capture more upside, but takes more time and can get paid sooner, at a discount, with immediate cash buyout
- Business model
- Seller commissions - at most auction houses 5-25%, larger the consignment, the lower the premium
- Buyer’s premiums - generally 15-25%, 17% at WineBid vs ~20-25% for live auctions
- Buyer demographics - ~135-150,000 registered bidders
- 70% US, 20% Asia, 10% Europe
- ⅔ Male, ⅓ Female
- Upper middle income and higher-tech, finance, professionals (lawyers, doctors)
- Demographics getting younger, particularly in 2020 -> interested in a broader selection of wines with higher mobile usage
- Most learn about WineBid via word of mouth, recently doing more social and digital advertising and trying to make the experience more personal
- Tips & Tricks for buyers
- Bid early, put in 1st bid at the reserve, and set your max price upfront -> this may discourage others from bidding on the wine
- Don’t get emotional and chase the wine up
- Look for wines that you know you’ll like without scores or in the 90-93 point range (94+ get big premiums); analysis based on average critic scores
- Only ~3% of the wine market is online, ~$10B online with a $325B overall market
- WineBid Innovations
- 360-degree hi-res bottle shots
- One of the best for still photography in wine auctions
- Shipping functionality - can see everything you have and pick and choose what and when to ship
- Some of the most detailed condition notes on bottles
- Wine price chart for the history of the bottle, like a Zillow Zestimate
- Most expensive wine sold on the site - a $50,000 bottle of Rose from Sine Qua Non
- Provenance premiums
- Don’t see significant premiums on provenance
- No significant premiums for original wood cases (“OWC”) - buyers often don’t want to pay extra to ship the wood case
- Certificates of authenticity not seeing significant premiums
- Label appearance is important to many buyers
- The proliferation of wine critics and influencers has led to some influencers rivaling and outpacing traditional media
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