When you hear “direct-to-consumer (DTC),” those of us in the wine biz know precisely what this means. We quickly imagine tasting rooms and wine clubs, and our eyes widen as we think of the high margins this sales channel brings to our business. While DTC is a concept that comes instinctively to us now, we must not forget how new this idea still is to our industry and others.
The fashion industry, for example, is resetting its sales model and embarking down the DTC path. From runway to department store isn’t the only way to make it anymore. There are a plethora of new online and subscription-based brands that have learned how to harness the power of the Internet, and some of them are even seeing the value in their own brick-and-mortar store fronts (e.g. Fabletics).
The DTC channel of the wine industry has boomed in the last decade, and in many respects we may have paved the way for others (the wine club is sort-of the original subscription service, isn’t it?). However, other industries like fashion are arriving to the scene at a time when there is far greater accessibility to the consumer and competition for the consumer’s dollar is now crossing industries. With DTC making up 60% of a winery’s total revenue on average (source: Silicon Valley Bank), it’s important that the wine industry take notes from the newbies to compete in the global DTC landscape.
Here's what wine can learn from fashion about direct-to-consumer sales and marketing:
Focus on lifestyle.
Your product itself doesn’t matter. What matters is how your product fits into a lifestyle, because what consumers consume says something about who they are. The decision of what to consume happens consciously with fashion as it does with wine, as people have or seek to have a particular image. Some pay attention to designer brands and what’s hot at fashion week just like they follow Robert Parker ratings and buy only 90+ point wines. Public opinion matters, and these consumers wear Marc Jacobs and drink Peter Michael ‘Au Paradis’ because somebody has told them they should. At the other end of the spectrum are the minimalists, those who lean toward the esoteric so as not to seem “cool” (although, this makes them feel cool, in a seemingly unassuming, uncool way). They want to be anything but traditional or trendy, desiring honesty and authenticity… so they might wear A.P.C. and drink Wind Gap Trousseau Gris, but only until those become mainstream. Then there are those who seek the tried and true. They focus on a reputation of quality, and take comfort in value and reliability. They don’t color outside the lines. These traditionalists wear Ralph Lauren and drink Jordan Cabernet Sauvignon.
Successful wineries are like successful fashion brands. They have decided who they are and to whom they want to appeal. “Everyone” isn’t their target market. These brands have chosen to align with a certain demographic as part of a certain lifestyle, and they don’t change their entire wardrobe whenever today’s outfit doesn’t feel right.
Generate original ideas for next season.
Whether it’s a jaw-dropping design on the runway at Fashion Week (a la Versace's “Lo” cut green dress) or a new way to produce and market traditional eyewear (Warby Parker), originality fuels success. Unfortunately, the wine industry struggles to innovate because most of the people working in it are old-school, so it remains a very traditional industry. To be successful at DTC in today’s world, you’ve constantly got to take a new look at your “5 P’s” of marketing (product, place, price, promotion and people) and come up with new strategies.
The Internet changed the game for fashion and new brands are able to pop up daily and quickly rise to the big league. Wineries could do a better job selling DTC if they beefed up their direct connectivity to the consumer. Warby Parker, for example, launched with great success due to strategic online marketing. Sure, they were able to produce much less expensive eyewear, but to disrupt the monopoly that existed in this category they had to reshape the consumer perception of how much eyewear should cost. Successful online companies are successful because they know how to craft smart messages and communicate them, not necessarily because they’ve launched a revolutionary product. An industry colleague of mine recently said, “I’m not a winery. I’m an e-commerce company and my product happens to be wine.” Wine, fashion, doorknobs… the product, to a degree, is irrelevant.
Consumers aren’t just comparing your wine to other wines and deciding which one to buy. The buying decision is much broader now as they consider whether to buy wine at all, or rather to spend their money on this month’s Stitch Fix or Blue Apron. So follow suit with fashion and get your brand out there through an original idea, communicated to the right people, through the most accessible medium.