Senior Amazon executive Bram Duchovnay says the multinational sees enormous potential in global alcohol sales but admits ‘there is a tonne of stuff that we don’t know at this point’.
Duchovnay, director and category leader at Amazon.com, told top figures in the wine trade – attending the inaugural Wine Vision trade show in London this week that the online trader (which reaches 200m unique visitors worldwide) is “building a destination for wine shoppers”.
But he admitted that Amazon - which netted $61bn+ in sales in FY 2012 - has gaps in its alcoholic drinks sales knowledge. For instance, the company only began selling wine in the US (using third-party merchants) in Q4 2012.
“We’re very early in the alcohol business, so there’s a tonne of stuff we don’t know now,” Duchovnay said, noting that Amazon believed real growth would now stem from non-media categories in consumables such as alcoholic drinks and fashion.
Storefront reflects ‘look and feel’ of wine experience
Amazon plans to develop ‘storefronts’ across different alcohol categories. Duchovnay used whiskey as an example, and said the firm already has a US wine store – fulfilled by merchants, since the three-tier distribution system complicates this market, with the “look and feel of a wine experience”.
Duchovnay said Amazon was encouraged by online alcohol demand, claiming that 62% of UK internet users who search for information about alcohol online are Amazon customers.
Furthermore, 25% of Amazon shoppers are Champagne drinkers, and (slightly bizarre this one) the retailer knows that Amazon users are 41% more likely than YouTube users to buy alcohol online.
Duchovnay said the early history of Amazon’s online alcohol sales in the UK, since late 2012, showed that customers were visiting the site to buy premium products, gifts and hard to find items.
Gift packs of wine and Champagne are popular, with the retailer now building up a body of product reviews – a key element of its marketing proposition – that help attract and retain custom, since consumers trust word-of-mouth reviews more than claims by manufacturers or retailers.
Targeted consumer merchandizing
One strength of Amazon’s platform is that customers ‘cross shop’ across categories, Duchovnay said. For instance, earlier this year Amazon cross-marketed a Crystal Head Vodka, the official vodka of the Rolling Stones, alongside the band’s clothing and music lines.
Citing Amazon’s capacity for targeted consumer merchandizing and marketing, Duchovnay noted that the site suggests additional products to visitors who browse or buy given items.
Responding to a BeverageDaily.com question, Duchovnay denied that Amazon worried by the fact that the UK major multiples – Waitrose, Tesco, Sainsbury’s, etc. – that already sell alcohol online had stores where customers can taste wine, and pick up bottles
“There are lots of product categories where you might say – ‘it’s really critical to be able to hold and feel or taste the product’,” he said.
But Duchovnay said Amazon’s nascent grocery business was now growing strongly in several regions, and said its online resources – such as the product details page – were not available offline.
“Customers can really get to know the product through that experience. Yes, they don’t have the opportunity to taste the product, but if they buy the product, taste it, then decide they want to return it – we make that process as easy as possible,” he said.