Wine shipping cost comments from a cancelled Wine Club member survey
March 04, 2008
Early this year, we made a point to reach out to our canceled VINsider Wine Club members and ask them for some feedback on what we could be doing better. I'm not worried overall about our club members; our median tenure of a club member is about 3.5 years, more than double the industry average. Still, I was sure that we could learn something from the former members who have moved on.
We're still receiving dozens of survey responses each day, and we're holding off on rigorous analysis of the data until we have received most of the surveys we expect to get. I'm sure that these will lead to several additional posts here on the blog. Still, I've been reading through many of the responses and was surprised to see one item pop up with some frequency. Several ex-club members have commented that they don't like paying shipping for wine, or that they think that what we're charging for shipping is too much for them.
I was surprised, since we subsidize shipping costs considerably, particularly to the East Coast (where most of the survey respondents who mentioned shipping costs live). I wonder how often these people have tried sending 40-pound packages second-day air across the country. We receive good shipping rates from FedEx thanks to our membership in the Wine Institute (about half off FedEx's published rates) but we still pay between $70 and $79 to ship a case of wine to the East Coast, and between $40 and $46 to ship a half-case of wine. We charge our customers $45 (full case) and $30 (half-case). In the mountain states (where we charge $25/$35 for half case/full case) we pay $29/$55. In California, where we use UPS Ground (they guarantee next-day delivery to nearly the entire state, and second-day on a few outlying fringes) we pay $19/$29 (we charge $15/$25).
Yes, we're receiving a higher margin on this wine, since we're selling direct to customers, but we're also providing most of these customers (our wine club members) either a 20% or a 25% discount, and absorbing packaging costs and labor expenses.
I wonder how other wineries do this. Many of the customers who mentioned that they felt our shipping prices were high said that other wineries who they ordered from provided very inexpensive shipping (on the order of a $15-$25 per case) or even free shipping. I can only assume that these wineries must be eating this cost to do more business on the East Coast.
Shipping costs have gone up enormously over the past few years, reflecting the higher costs of gasoline. On of my first conclusions from this survey is that I'm not sure public perceptions have changed along with them.