In the last few weeks, we’ve participated at several large industry events, including the annual DTC Symposium, the Unified Wine & Grape Symposium, and the Oregon Wine Symposium. These have all been wonderful occasions to connect with our friends and partners in the industry, but did you know that Sovos ShipCompliant also puts on conferences to showcase regulatory and market trends affecting the beverage alcohol industry? Currently, we are getting ready for the return of our Beverage Alcohol Summit, which will take place in New York City on March 24, where we will be joined by industry experts talking about need-to-know updates affecting all suppliers and wholesalers. And then, our annual Wine Summit is coming up on May 28 in Napa. To find more information on and register for these events, look on our website.
Just in case you can’t make it to one of our events, we still …
When I joined Wines & Vines magazine in 2011, I received an in-depth introduction to the world of direct-to-consumer wine shipments through the magazine’s collaboration with ShipCompliant.
Back then the channel still seemed new, relatively novel, and while sales were strong in a few key markets, the overall growth of the segment was hobbled by several large states being closed to direct shipments. White wines accounted for a tiny share of overall shipments and the time of year had a huge impact on total shipment volumes.
Now in 2020, with the release of the tenth annual DtC Wine Shipping Report, we’ve seen Chardonnay grow to account for 9% of all shipments by volume and rosé shipments have exploded, growing more than 10% by volume in 2019. I didn’t even think about rosé back when I first started writing about DtC shipments. Shipment volume during the summer has also increased year …
Direct to consumer (DtC) sales are viewed as a direct competition to traditional three-tier wine sales, but is this really the case?
At a transaction level, individual sales do present competition. Yet, at a macro level, the two channels support each other by increasing consumer demand and driving industry growth.
Bridging the availability gap
The three-tier system and DtC shipping are separate channels representing different missions and shouldn’t be viewed as traditional competitors. Both are necessary to satisfy consumer needs and increase market demand. In fact, these two entities can complement one another with cross promotional activities that benefit the entire industry.
The three-tier system relies on distributors. Large distributors wield tremendous influence, and they inherently focus on established brands and may overlook smaller wineries. This limits the ability of those wineries to get their products to a national market. DtC sales can supplement the lack of …
Curious as to what you might find at the Sovos ShipCompliant Beverage Alcohol Summit in New York City? This one-day event will bring together beverage alcohol producers, suppliers, importers, industry experts and regulatory officials to discuss challenges and solutions that arise in the three-tier system and across the industry.
Here are three reasons we’re excited to attend the 2020 Beverage Alcohol Summit:
Hear two keynote addresses from two experts.
Jim Watson is a senior analyst at Rabobank’s research group, covering the American beverage alcohol sector. He studies consumer and industry trends that are shaping the beverage industry, giving insight into what is to come.
Andy Hovancik, CEO at Sovos, has over 15 years of experience with regulatory and compliance software companies. Andy will share his perspective on how Sovos is on a mission to solve tax for good so businesses prosper and communities thrive.
Every year, Sovos ShipCompliant is proud to release an annual report of the direct-to-consumer (DtC) wine shipping market in conjunction with our partner, Wines Vines Analytics. The 2020 report is now out and available for you to download—free! 2019 was an interesting year for beverage alcohol sales broadly, and many of those overarching concerns—decreased overall consumption, shifting product preferences by consumers—also seemed to shape a DtC market that saw slower growth than in previous years. Nevertheless, the DtC wine shipping market remains strong, with lots of room for future growth.
You can read all about these findings in our report and our overview linked below. In the rest of the Roundup, we also look at continued threats from tariffs despite the reported “truce” between the U.S. and France. Then, more reflections on the strength of the DtC market and why New York is such a large producer …
This January, Sovos ShipCompliant released the 2020 Direct-to-Consumer (DtC) Wine Shipping Report with our partner, Wines Vines Analytics. The year 2020 marks the 10th annual DtC report, which features exclusive data and insights on the state of the industry not tracked or reported on anywhere else. With wine shipments to consumers reaching a record $3.2 billion in 2019, all eyes are on the continued yet slowing growth of the maturing DtC market. Let’s dive into the numbers and what they mean for 2020 and beyond.
How we get the report numbers
We’re frequently asked about how we gather and analyze the data for the report, so here is a peek inside the process. The Direct-to-Consumer Wine Shipping Report takes shipment data from over 1,000 U.S. wineries’ shipments to consumers each month, totaling more than 20 million shipments over the course of the year.
2020 marks 100 years since the start of the Prohibition Era (the Volstead Act, which implemented the 18th Amendment, and prohibited the sale and production of any product with more than 0.5 percent ABV, came into effect on January 17, 1920). As such, there has been a lot of coverage in the media of this dubious anniversary, some of it pointing out the problems of Prohibition and moralizing human behavior in general, and others wondering whether we’ve swung too far against the idea of temperance. To paraphrase Spinoza, we certainly don’t want to be doomed to repeat the past (hint, hint, neo-Prohibitionists); and studying history is an invaluable (and fun!) way to learn those lessons. But we also should recognize that we face a different world and society than existed 100 years ago (climate change, for one, is new; and even things that at times rhyme with the …
This month, Sovos ShipCompliant is set to release the annual Direct-to-Consumer (DtC) Wine Shipping Report with our partners Wines Vines Analytics, based on 2019 data. Soon after, we’ll be sponsoring and presenting an exclusive first look at the report during the Direct-to- Consumer Wine Symposium near the end of January.
Here is what you need to know about the report, along with some key findings from 2019 to keep in mind for the upcoming 2020 report and where the new DtC report findings will be showcased at forthcoming industry events.
About the 2020 Direct-to-Consumer Wine Shipping Report
The Direct-to-Consumer Wine Shipping report is a one-of-a-kind industry report, presenting data not tracked or reported anywhere else. Sovos ShipCompliant and Wines Vines Analytics have been collaborating since 2011 on the direct-to-consumer channel’s exclusive shipping report, with the 2020 report marking the tenth edition.This unique industry report gives detailed insights on …
Here we are with the final Roundup of 2019, and more than that, the final Roundup of the twenty-teens. And what an eventful decade it has been! Back in 2010, Sovos ShipCompliant was still a hardscrabble startup focused on supporting the development of the DtC wine shipping market. Since that time DtC wine shipping has grown more than three-fold into a $3 billion annual market. Meanwhile ShipCompliant also expanded to support more product types and sales platforms, including building out the Product Registration Online tool that has helped improve brand/label registration processes in more than a dozen states. In 2015, we merged with Sovos Compliance to help develop one of the largest and most comprehensive business-to-government compliance support companies in the world.
Any extended period of time will see its share of good times and bad, triumphs and tribulations. But through everything, we have aimed to keep our focus …
Sovos ShipCompliant has a new home online and a new name.
The brand new Sovos ShipCompliant website is now online. It offers easier navigation, deeper descriptions of product offerings and an improved look and feel. Along with those new wrinkles, the new site also features the latest industry observations in the Sovos ShipCompliant blog, as well as an updated webinar calendar and a collection of links to press articles.
Beyond the new website, the ShipCompliant product family also has a new identity, Sovos ShipCompliant. Part of Sovos since 2015, ShipCompliant was previously known as ShipCompliant by Sovos. The new name showcases that ShipCompliant products are an integral part of the overall Sovos platform.
A shared vision within Sovos
Worldwide, Sovos supports more than 7,000 customers. Some 2,000 of those customers use Sovos ShipCompliant. Across Sovos, our team shares a vision for improving the lives of business leaders and …
In our end-of-year webinar we covered the news and changes that encompassed the beverage alcohol industry in 2019. We discussed industry growth, the latest trends like hard seltzer and canned wine, and recent regulatory updates like the Tennessee Wine & Spirits v. Thomas decision.
Industry growth through ShipCompliant data
2019 was a busy year for direct-to-consumer shipping. Our thousands of customers shipped almost 9 million packages and generated and filed 360,000 reports. We focused on protecting and helping grow the DtC channel. As 2020 nears, we are looking at opportunities to expand services for distributors and importers and keeping an eye on retail DtC and DtC shipping for cider, beer and spirits.
December 5 was the 86th anniversary of Repeal Day, the day the 21st Amendment was enacted, restoring the legal market for producing and selling alcohol in the United States. While the many decades between then and now have been very fruitful for producers, distributors, and retailers of alcohol and the satisfied consumers they serve, the industry would do well to remember that there are still efforts to denigrate and tarnish beverage alcohol, even some trying to bring back Prohibition. Therefore, let’s take this anniversary to remind ourselves of the sense of responsibility that undergirds our industry. That responsibility reinforces the notion that enjoyment and safety are not enemies. It acknowledges that alcohol is enjoyable and fun and a part of human identity going back millennia; but also that alcohol is an intoxicant and can have pernicious effects if misused. As such, it forces us to realize that the freedom to …
In past articles, we discussed delivery rate and the problems that occur if your delivery rate is low. There are many ways to improve your delivery rate (the percent of your shipments that are delivered on the first delivery attempt) which will in turn, improve your customer’s experience.
Before the package ships…
If you have a club, email your members prior to shipping (at least two weeks in advance of the ship date) so they can update their address and contact information, or make any adjustments to their order. For daily shipments, email your customers at the time the order is placed with an estimated delivery date or date range. Both options provide an opportunity for your customers to review and edit their information before the order ships.
Encourage your customers to ship to a business address.
Only 38 percent of packages are shipped to business addresses annually, with a 97 percent delivery rate. This is a significant contrast to the 62 percent of packages that are shipped to residential addresses where only 78 percent are successfully delivered on the first attempt.
Provide more options before shipping.
If you ship to areas that are subject to extreme hot or cold temperatures, your package could be at risk for exposure to temperatures that can damage the integrity of your wine. Providing options like expedited shipping, or even asking your customer if their package could be shipped at a later date when temperatures are safe are solutions to minimize package damage.
As discussed in a previous post, carrier hold locations are powerful because they give your customers options to ship directly to or reroute to a carrier hold location near the original destination.
Once the package ships…
Notify your customers that their package is on its way.
Keeping your customer informed is key to successful delivery. It allows customers to prepare to receive their package, or make necessary alternate arrangements. This includes making sure someone who is 21 or over is available to sign for the package, or rerouting the package to a carrier hold location.
Monitor packages for issues.
Once you detect an issue with a package, contact the customer as soon as possible so they are aware of the situation and the solutions. Sending an email or giving your customer a quick call goes a long way to create a great experience.
Similarly, if the customer has a package held at a carrier location, contact them to remind them that they have five business days to pick up their package. That could save the package from being returned, which ultimately saves time, money, and the customer’s experience.
Incorporating these practices into your process will offer not only a higher delivery rate, but a better experience for your customers, and who doesn’t want that?
What are things that you do to improve your delivery rate? Tell us in the comments!
Contribution from ShipCompliant means big impact for local nonprofit
The Entrepreneurs Foundation of Colorado (EFCO) today announced it will distribute a generous grant to The Community Foundation Serving Boulder County. The grant is made possible because Boulder startup ShipCompliant elected to share a portion of its sale proceeds with the community. ShipCompliant recently merged with Sovos Compliance. ShipCompliant’s team chose to support The Community Foundation, in partnership with Cooley LLP, because of its work on behalf of Boulder County nonprofits that contribute to strengthening their community.
“It’s gratifying to share a portion of our success with the community that helped us build a durable and impactful business,” said Jason Eckenroth, Founder and CEO of ShipCompliant. “This is where our employees live and work. We know that offering a high quality of life is key to our ability to attract and retain competitive employees. Our local nonprofits play a big role in driving that quality of life. We’re proud to make this contribution and the impact on our community amplifies our feeling of gratitude.”
The Community Foundation’s President Josie Heath echoed that enthusiasm.
“This is a significant gift for us,” Heath said. “Even though the local economy feels strong, there are many in our community struggling with the challenges presented by poverty. In particular, Boulder County’s poverty rate exceeds the state’s, with an increasing number of children living below the poverty line of $24,250 for a family of four. This money will go into our Community Trust fund, which supports nonprofits across Boulder County doing work to improve the quality of life.”
ShipCompliant’s contribution to local nonprofits is the first via EFCO for 2015, which closed out a record year in 2014 for the number of members contributing to local nonprofits through successful exits. EFCO’s total impact on community organizations exceeds $3M since its first exit in 2008.
About Entrepreneurs’ Foundation of Colorado (EFCO)
Established in 2007, EFCO is a network of Colorado entrepreneurs whose companies have joined together to give back and share their success, which they do by gifting a portion of their founding equity or a portion of their yearly profits to the community. Founding members include Rally Software, Foundry Group, TechStars, Symplified, Tendril, and others.
Realizing cash is limited with start-up companies, EFCO works to encourage entrepreneurs throughout the region to earmark equity for their community early in a company’s inception. Upon a private sale or initial public offering, these shares become liquid and transfer into the community.
EFCO currently has 80 members and has distributed more than $3M to area organizations, in addition to hundreds of volunteer hours from its members and their employees. To learn more about EFCO, visit www.efcolorado.org or follow us on Twitter: @EFColorado. EFCO is a program of The Community Foundation Serving Boulder County.
ShipCompliant is the industry leader in creating SaaS compliance and transaction platforms for the beverage alcohol industry. The company makes products people use and love, reducing …
A Message from ShipCompliant President, Jason Eckenroth
I’m excited to announce that ShipCompliant has combined forces with Sovos Compliance, a leader in tax compliance and reporting software. It’s a done deal; you won’t talk me out of it.
Who is Sovos Compliance?
Sovos Compliance is the recently named combination of compliance industry powerhouses Taxware, Convey Compliance, and VAT Resource.
In the past decade, I’ve had the benefit of working with incredibly passionate entrepreneurs, professionals and visionaries… and made lasting friendships in the process. We’ve had the opportunity to touch the lives of thousands of customers, help an industry change, and show that you can build a great and durable business grounded in strong values. But there is so much more that we can do. With the right partner, we can take our capabilities to an entirely new level for the benefit of our customers, employees and partners. After careful consideration, we decided Sovos was that partner.
Here are the three main reasons I made that call:
Sovos and ShipCompliant share a similar vision for improving the lives of business owners by freeing them to pursue commerce unencumbered. With Sovos’ extensive resources and widely-recognized source of tax and compliance data, we will be able to execute against that vision with much greater speed and breadth of effect. Basically, we’re still going in the same direction; we just want to get there faster!
Sovos supports our core values [link] and unique customer-focused culture at ShipCompliant. Our company will continue to run as an independent division in Boulder, Colorado, driven by the same team[link to the recipe book] you already know.
This combination creates incredible career opportunities for our team. Both companies are committed to personal and professional development. Together, we will fulfill our goal to attract the most talented people in the country who seek to build a meaningful career and a great place to work [link to outside magazine ranking].
On a personal level, it was important to me that Sovos shared my commitment to a values-based organization. The values we attribute our success to date are:
Feel It – We have authentic empathy for our customers, partners, and each other.
Own It – We take responsibility for outcomes, good and bad. We don’t pass the buck, and we see things through.
Shape It – We have a passion for possibilities, which drives us to revolutionize an industry and author our future.
Scale It – Born from our bootstrapped roots, we leverage opportunities for exponential impact in all that we do. 1+1=3 at ShipCompliant.
How we got here:
Six88 Solutions was founded in 2000 to create web-based business solutions founded on the principles of customer success and responsibility to commitments. These became the foundation for the company’s core values, which have shaped the solutions we’ve created and the team we’ve assembled. In 2006, we launched ShipCompliant to help wineries take advantage of the burgeoning direct-to-consumer sales channel. I remember advice that Tom Siebel (Siebel Systems) gave me at …
Earlier this year, we published a post that celebrated the new opportunities that direct shipping into Massachusetts would provide to wineries shipping direct-to-consumer. We also walked through the recommended steps wineries should take to begin shipping into Massachusetts as of February 1, 2015. As March comes to a close we wanted to provide a quick update on the status of direct shipping into Massachusetts.
It’s been almost three months since the new direct shipping law came into effect in Massachusetts and there are 531 wineries permitted to ship into the Bay State. For comparison, 629 wineries registered for direct shipping permits in Maryland in all of 2011, the first year permits were issued.
This active early adoption rate is consistent with the high expectations expressed in the 2015 Direct Shipping Report for Massachusetts as a new direct-shipping state. As of today, FedEx has been shipping into Massachusetts since February 1st, however, UPS is not shipping wine into or out of the state.
We’re so excited for the quick growth of this new market. Below are the names of the wineries that are permitted to ship into Massachusetts. If you live in Massachusetts and love great wine, order wine from these fantastic producers. If your winery is listed below, send us the link to your online store and we’ll link to your winery in our list below.
Not all direct-to-consumer wine shipments are created equal. Across the country, state regulatory agencies treat on-site and off-site orders differently. So what is the difference between an onsite order and off-site order?
Any order placed without the consumer being physically present is considered an off-site order.
On-site orders meet the following criteria:
The order was made while the consumer was physically present at the winery
The consumer chose to have their wine shipped home to themselves instead of carrying it out with them from the tasting room
The order is not a gift
The following states allow on-site orders without a license but require a license to make off-site shipments:
When making on-site shipments to any state, we recommend that wineries capture proof that the customer was physically present in the winery when the order was placed in the event of an audit. An example of an on-site sale record is a signed receipt.
There are a few states that differ from the traditional on-site order concept, for example:
Arizona: Allows wineries to make subsequent shipments for the remainder of the calendar year to a customer who has purchased wine in the tasting room.
Indiana: Only allows shipments to a customer who has physically visited the winery.
Arkansas: Issues permits for direct shipping but only allows wineries to ship on-site shipments — off-site shipments are not permitted under any circumstance.
This is a map of federal on-site states.
Another common misconception is to assume that club shipments are on-site orders because the consumer signed up for the club in the tasting room. Club shipments should not be considered on-site shipments unless the club member comes into the tasting room and pays for each order on-site before each shipment.
In a recent post, we discussed the delivery problem. Frequently, consumers who order wine aren’t able to accept their package. Either they aren’t available during the day or they don’t have someone 21 or older available to sign for their package. This challenge frequently results in failed delivery attempts and a lot of back and forth on last-mile delivery trucks. These delivery problems pose unique challenges for the wine industry because of the products’ sensitivity. The longer your wine is on the truck, the more risks it encounters and ruined wine costs money. If your product is compromised during shipment, you’ll have to replace and reship. Also, this causes a less-than-desirable experience for your customers.
Wineries with high delivery rates (the percent of your shipments that are delivered on the first delivery attempt) take precautions to prevent failed delivery attempts and returns. One of the most powerful precautions is leveraging existing, no-cost hold location options. Carriers provide this option which allows customers to pick up their wine packages at their local FedEx or UPS facility when it is convenient for them.
FedEx Hold Locations
FedEx allows packages to be sent directly to or rerouted while en route to a FedEx location near the original destination. FedEx Hold locations provide a level of convenience that has the power to improve the customer experience due to the ability for you or your customer to request the reroute.
With more than 1,700 FedEx Hold locations nationwide, many of them are open 24 hours daily. It’s a no-brainer, especially since there is no charge for this service. Also, if a telephone number is included, FedEx will contact the recipient after the package arrives at the FedEx Hold location. Packages can be held for up to five business days and can be released only with proof of identification, so it is also a secure option for your customers. To learn more, visit FedEx’s site.
UPS My Choice
UPS My Choice allows customers to hold packages that are going to their home address for will call (request packages to be held for pickup at a UPS facility). This service is free to your customers but requires them to become a UPS My Choice member to take advantage of this service. To learn more, visit UPS’s site. Again, this service provides an alternative to shipping directly to your customer and risking a failed delivery.
Regardless of carrier, it’s important to provide your customers with options outside of delivering directly to their home or work, where they might not be able to accept their wine packages. Hold locations offer a better solution to failed delivery attempts and returns. Using these services ultimately improves the customer experience and saves you time and money.
It’s that time of year again — registration is open for ShipCompliant’s DIRECT conference.
ShipCompliant’s 10th annual conference is a two-day event featuring an impressive lineup of highly-respected keynote speakers. Registrants will hear from a variety of leading experts on the latest direct shipping legislative changes and other evolving topics in the wine industry.
The event also offers the opportunity for ShipCompliant customers to connect with the ShipCompliant staff in one-on-one sessions and participate in group workshops.
Here are just a few of the incredible speakers you’ll see if you attend the event:
Chip Conley, Head of Global Hospitality, Airbnb; Founder, Joie de Vivre Hotels & Fest300 (Hospitality)
David Rendall, Author, The Freak Factor: Discovering Uniqueness by Flaunting Weakness
Steve Gross, VP State Relations, Wine Institute
Bobby Stuckey, Master Sommelier, Frasca Food & Wine, Boulder, CO
Want in on the fun? Here are the details:
When: May 28 & 29, 2015
Where: Napa Valley Marriott, 3425 Solano Ave., Napa, California94558
It’s easy to think that once your wine has left your property or the fulfillment house, you don’t need to worry about it anymore. In discussions with our customers, we’ve found that that isn’t the case. Package delivery is a critical component of direct-to-consumer wine sales.
Consumer expectations have increased as a result of the new delivery precedent that companies like Amazon have set. People expect that receiving packages should be easy. If your customers’ wine isn’t delivered on time, the first time, their experience with your winery becomes tarnished, and the work that you put into creating an incredible experience is at risk. This is where the ability to manage package delivery becomes crucial to maintaining the experience that started in your tasting room.
The Importance of a Good Delivery Rate
Delivery rate is the rate at which your wine is successfully delivered. It’s measured as the percent of your shipments that are delivered on the first delivery attempt. It’s essentially a score — the higher the percent, the better.
The Big Delivery Problem — Failed Delivery Attempts
The adult signature requirement for wine packages compromises delivery rates. Recipients usually aren’t home during the day when the common carriers (FedEx and UPS) attempt to deliver packages to their house or apartment.
Combine that with the fact that many customers are either not comfortable receiving wine packages at work or they aren’t willing to haul a case of wine home from the office. Of the almost six million packages that go through ShipCompliant Direct each year, 62 percent (and climbing) are shipped to residential addresses. Only 78 percent of those packages are successfully delivered on the first attempt. If you refer to the math problem above, that’s a C+. I’m sure you’ll agree when we say that that’s not good enough.
Percentage of Packages with Residential Delivery Addresses Over Time
The Risks of Failed Delivery Attempts
One of the last things you want is for your wine to go back and forth on last-mile delivery trucks. Failed delivery attempts can lead to a host of problems:
Extended exposure to temperatures that are too hot in the summer or too cold in the winter
Customer anxiety around where and when they will receive their order
Customer dissatisfaction due to the effort of trying to coordinate the delivery
Staff time dedicated to managing the customer experience
Additional risks to the package health
Lost time and money
As you can see, the results of these failed attempts are detrimental. We know that you, like us, want to provide an incredible experience for your customers. Buying wine should result in delight — not distress. What does your winery do to ensure that the customer experience doesn’t end when shipment begins? Share with us in the comments.