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The share of e-commerce in the retail trade is also growing in the wine industry. There is hardly a trader or vintner who does not use this sales channel for himself, be it to tap into new customer groups or just to have an easy way to reorder for his existing customers. However, on the internet, you are faced not with a few, but with many thousands of competitors. And - much as one may regret it - competition always means price pressure. No matter how hard you try to emphasise other features, in the end it is the price that counts.

Watch out for cost traps

So costs down and efficiency up is the motto. However, there are many unexpected pitfalls to be aware of in online wine sales. It is unrealistic and also unnecessary to avoid them completely, but it is important that you gain decisive advantages over your competitors!

Since we at wein.plus have been working intensively for 20 years to develop solutions and assistance for our Premium members, I know these pitfalls very well, and in many cases we can also offer solutions to our members. However, the following information applies without restriction only to wine merchants and winegrowers based in Germany.

1 Too expensive shipping

Spoiled by Amazon & Co, customers today expect free shipping, at least above a certain order quantity. Simply passing on the shipping costs incurred does not work in internet competition. So the search for a low-cost shipper is crucial. As a lone fighter, however, you have little negotiating power vis-à-vis DHL, UPS & Co. This is where the large community of over 2000 Business Premium members of wein.plus can help you. This community sends about 1 million wine cartons every year and can thus achieve considerable price reductions. The partner of wein.plus here is UPS, which is also characterised by a very low breakage rate (particularly important in the wine business) and high reliability. We do not earn a cent from it, but pass on the conditions 1:1 to the members.

Whoever does not participate here risks the first important cost disadvantage in the competition.

2 Shipping boxes that are too expensive

The second cost component that is incurred with every Internet order is the shipping carton. The price of certified shipping cartons varies significantly depending on the provider; here you can save a lot by buying cheap.

We, i.e. the community of Business Premium members of wein.plus, have concluded an agreement with a manufacturer of corrugated cardboard packaging after an elaborate market analysis and a long preliminary selection, developed our own boxes and had them certified by UPS. Thanks to the very large purchase volume of the community (we assume a very high six-digit figure per year), this was very favourable. Since the manufacturer has its own high-bay warehouse and its own shipping department, there is also no classic middleman. The orders are handled in close cooperation with wein.plus. wein.plus also waives its own margin here - as a result, the carton prices achieved are unbeatably low.

3 Non-certified shipping cartons

Wine is by its very nature a particularly fragile item to ship. So it is unfortunately unavoidable that one or the other consignment gets broken during transport. This is very annoying for the customer because the shipment does not arrive as expected. But it can be even more annoying for you if you are left with the costs for your wines.

Although shipping with the usual service providers (UPS, DHL,...) is insured, the costs are not covered if the shipping box is not expressly certified by the sender. For some shippers (e.g. DHL), this certification is only valid for a single country. When shipping to other countries, a rejection is therefore made despite the boxes being certified exclusively for Germany, for example!

Even worse: If other parcels are damaged by a non-certified box, there is even the threat of further consequential costs.

With UPS, the breakage rate is very low; if something does happen, the certification and thus the insurance are valid throughout Europe. This is one of the reasons why we recommend UPS as a shipper and of course only the use of certified cartons.

4 Lack of organic certification

In Germany, every wine merchant who ships wine and has at least one organic wine in his assortment needs an annual organic certification according to the EU organic regulation. The costs for this amount to several hundred euros per year, depending on the certification body.

Certification is necessary regardless of whether you advertise with "organic". It is sufficient that one of your wines is designated as organic on the label. If you do not have certification, you could face fines from the authorities and warning letters, which can ruin your calculations very quickly.

Here, too, wein.plus has reached an agreement with a certification body according to which the latter passes on to us the expenses saved by the homogeneous structure of the Business Premium members of wein.plus in the form of a very favourable price.

5 Violation of the Packaging Act

For several years now, the "first distributor" of packaging has been obliged to pay a fee to a dual system for disposal by the end consumer. As of 1.1.2019, the Packaging Ordinance has been replaced by the Packaging Act, which provides for very far-reaching control options by the authorities and the competitor. In a public register, everyone can now check whether you are complying with your obligation. If you do not, you may face fines as well as warning letters.

6 warning letters and or fines

The new website is ready and we can start selling wine. Unfortunately, however, we live in a legal system that makes warning letters by (so-called) competitors possible even for the smallest infringements. As legal laymen, we are usually overwhelmed to recognise these and to permanently adapt our website to changing legal framework conditions.

It is an open secret that many warning associations regularly check our websites for legal violations using automated robots, so that after a change in the law or in the case of new websites, it often only takes days before an expensive warning letter flutters into the house.

A popular field for this is, for example, the "Food Information Act", which has brought many new obligations for wine suppliers. But competition law, the Basic Data Protection Regulation, the German Telemedia Act (TMG), the Service Information Obligations Regulation, press law and other laws also harbour many risks.

Following a ruling by the Regional Court of Bochum on 23 January 2019, the topic of age verification of purchasers and recipients within the framework of the Youth Protection Act is very current.

So let a lawyer help you before your website goes online. So that this doesn't hit your budget too hard, we have negotiated a framework agreement for you with a lawyer who specialises in online law in the wine sector.

7 Payment defaults

The wine has been delivered and now the money is coming. That's how it should be, and fortunately it usually is, for example if secure payment procedures are used in the ordering process and the money is therefore safe before the goods leave your house.

However, it is often unavoidable to deliver on account. The invoice is still the German's favourite payment method, and we don't always want to do without these customers. But direct debits can be recalled by the customer within 8 weeks without justification, so even these funds are not entirely safe.

Payment defaults are doubly annoying. You don't want to and can't do without the money for shipped goods, but hiring a lawyer or debt collection agency is not without problems either. If the customer is definitely insolvent, instead of money you get the fee invoice of the debt collection agency or lawyer.

Together with a debt collection agency, we have worked out a solution for our members in which no costs are incurred in the case of irrecoverable debts!

8 Too expensive advertising or no advertising

How do I win new customers? The internet has its own laws. You can book banners, use search engine advertising or buy advertising on marketplaces like Amazon or eBay. In the end, there is always the question of how much advertising effort per customer and euro of turnover you have invested. This can quickly cost the entire turnover or even more. So be careful which measures you commission. But of course "no advertising" is no solution either. So you have to find efficient and effective measures.

It is virtually free to be found via Google search. The most important prerequisite for this is the so-called link relevance, i.e. many qualified links from wine websites that refer to your website. As a Premium Business member, you automatically receive plenty of valuable links that bring you many additional clicks and a higher link relevance.

9 Wanting to do everything on your own

What is more helpful and cost-saving in business than the advice of colleagues with whom you are virtually in the same boat? A strong community helps, ensures that you avoid mistakes and lets you profit from the experience. The community of Business Premium members has formed a special closed group on Facebook, to which you only have access as a Premium Business member.

10 Incorrectly paying VAT for foreign deliveries

Do you sell wine abroad? And to whom do you pay the sales tax for these sales? Hopefully not to the German tax office, because that would be fiscally incorrect. And this is different for wine than for most other goods - from the very first euro of turnover, since the so-called "delivery threshold" for alcoholic beverages is zero. Please discuss this issue with your tax advisor. Otherwise, there is a risk of considerable additional payments of the incorrectly paid VAT in the case of tax audits.

Overview of customs and tax formalities for wine deliveries abroad

We can help you

Do you want to sell wine over the internet and increase your competitiveness? We, the community of all business members and of course the team of wein.plus, are happy to help. Please contact us. In the already mentioned Facebook group or by e-mail to me personally: graafmann@wein-plus.eu

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