Online wine gets staggers

THE recent closure of e-tailer Wine Planet after its acquisition by Foster’s Brewing points to a less-than-rosy future for WA online wine retailers.

Delivery charges, pricing structures and consumers’ reluctance to buy online has resulted in WA’s wine e-tailers struggling to stay afloat.

Dedicated wine e-tailer Liquor Home closed its doors two weeks ago after operating since last July, while fellow WA online retailer Liquor Spot is currently in the hands of administrators.

Foster’s lost nearly $40 million from its Wine Planet investment. Upon acquiring the company earlier this month at 35 cents a share, Foster’s followed through with its promise to close the ailing online retailer.

At the height of the technology boom, Wine Planet shares were trading at $2.50. It was one of the highest profile dot.coms to float on the Australian Stock Exchange.

But the same problems facing other e-tailers soon led to its demise.

Liquor Spot chief executive officer Wayne Carew-Reid said it had become very difficult to obtain profits from online wine retailing.

“Getting profits from selling wine online is almost impossible at the moment,” he said.

“Wine retailers like Wine Planet were, in fact, selling wine without including the delivery charges in the price and they were virtually selling everything below cost. But you can only do that for so long.”

Mr Carew-Reid said that, although Liquor Spot was in the hands of administrators, sales were beginning to improve and he was looking for an investment to kick-start the site.

He said wine e-tailing was ahead of its time and believed people eventually would buy liquor online.

“As people become more familiar with the Internet they will buy more wine, but it’ll be a bit of a process leading up to it,” Mr Carew-Reid said.

Liquor Home spokesman Laurie Hurley agreed that selling wine via the Internet was ahead of its time, but said the marketing costs to drive traffic to the site also were a burden.

“Our business model was fantastic, we just didn’t have the resources to keep marketing the site,” Mr Hurley said.

He said wine e-tailers could offer either a low-cost product or the convenience of delivery, but trying to do both was a no-win situation.

Liberty Liquors marketing manager Kevin Sellars, however, said the culture of purchasing wine was not transferable to an online environment.

“People are always pretty passionate about wine and they like coming into the shop and having a look around,” Mr Sellars said. “The computer is just a cold hard face when you try to do that sort of thing online.”

The online division of the established WA liquor retailer had been anything but “earth shattering”, he said, with Internet orders making up only a small portion of the company’s total sales.

Like Foster’s, Liberty Liquor’s online division is more successful in the corporate sector. It is believed Foster’s Brewing will keep Wine Planet’s corporate services site operational.

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