E commercet: the Future Distributor for Wine Companies
There comes out a new way to sell wine in China. And this new solution seems to take over the traditional one like distributors. It is called wine E-commerce.
Status quo of wine E-commerce in China
The gold time for wine in China is from 2007 to 2011 when most companies made huge profit from this market has ended. But the market has been developed and it is booming now. The total sales of wine in China in 2012 will be 1.2 billion bottles, almost one bottle for each Chinese.
In fact, it is just a developing market. Wine imported to China has increased by 70% in 2011.
And wine has been brought to other tables not only for dinner. For example, more and more Chinese people send wine as gifts to their friends. In a country with strong gift culture, to be used as gift means a huge market. And also 40 billion USD wedding market has also become a cake for wine now.
It is still not a market full opened. It is foreseeable that a explosive growth will come later. And now is the best time to enter the market, Shen Dongjun (Richard Shen Dongjun, 42-year-old businessman with a chain of 400 jewellery shops, called Tesiro, around Shanghai and southeast China, has bought the a 22-hectare cru bourgeois estate in AOC Médoc for an undisclosed sum.) says.
With more and more consumers know wine and how to drink wine, professional online wine shops, or wine e-commerce companies start their business in the online wine business. But the online wine business is still in the beginning. As noted by a director of the leading comprehensive e-commerce website Dangdang, the sales online is not so big but the online wine sales will witness a rapid growth soon.
Meanwhile, Shen Dongjun also points out that the wine e-commerce is facing some problems thought the promising market brings e-commerce a lot of opportunities.
Problems and Trends
There are mainly two kinds of online wine stores now in China: professional wine stores and comprehensive wine stores. Professional wine stores are usually young but dynamic and professional. Comprehensive wine stores already have regular customers and huge budget while not so professional compared with the former one.
If a wine company wants to develop Chinese market via E-commerce, it can choose to cooperate with these two types of companies or open its own online stores. Usually, foreign wine makers will choose the cooperation so they can only focus on marketing and branding of its wine and save a lot time and efforts in sales and distribution.
No matter which solution you take, you should notice the following problems which most companies have met.
1. Price war
The core advantage for online wine seller is its convenience. However, most companies now are only focusing on how to cut off the price, not to improve convenience. It will result to a lot of problems such as vicious price competition like what has happened in home appliance industry, clothing industry in China. It doesn’t mean price is not important, on the contrary, price is one of the most important factors for Chinese customers to consider.
The discount information is made as obvious as possible.
While too focused on price will break the image of online stores and leave people an impression that online stores equal to cheap wine seller. What’s changing is now some companies have realized this and focus more on the marketing and branding of its wine. I have talked with some decision makers from online wine stores. They all agree that the branding and marketing is their priority concern when they choose a wine maker to cooperate. And for their stores, convenience is their key concern.
Online sellers is now considering about their service and branding of their wine. On the other side, online buyers are also worrying about credibility. In E-commerce field, credibility is always a problem for the players. Some companies already realize that and take action. For example, now AOC certificate is put in an eye-catching place.
The budget of marketing is always limited, so you should focus yourself on a certain group of target people.
Here in China wine market, the Pareto principle (or 80-20 rule) also works. According to their consumption, the customers can be mainly divided into three types:
- type 1: they consume a lot of wine
- type 2: about 20 bottles every year
- type 3: 5 bottles every year or even less.
You can also divide your customer according to the purpose they buy it. For example, you can divide them into 5 types:
- for parents: they usually buy it on Mothers’ Day, Fathers’ Day and their parents’ birthday
- for friends: they care more about beautiful package than quality of wine
- for girlfriend: the romantic package is the key concern
- for wedding: wine should look festive according to CHINESE CULTURE
- for themselves: quality and price is more important than package.
For example, if your major customers buy your wine for wedding, congratulations, they belong to the people not sensitive to price. So you can label a relatively high price and make your wine look elegant because Chinese are willing to pay most their savings for the wedding.
There are also many other way to categorize your customers. No matter which way you use, the purpose is the same: to positioning your wine as the one your major customer like! Highly focusing on them will save you considerable budget.
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