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At the end of July a product has been released that has shaken up the way fine wine is sold in the US. Vinfolio launched its Vinfolio MarketPlace. Before we push into pros and cons, what is the product?

From your own cellar management software you can identify wines that you want to sell.
The two supported software packages are the industry’s largest: CellarTracker and Vinfolio’s VinCellar
Sellers can offer one bottle at a time or their complete cellar, list a price (or not), and then it is up to them whether to accept a bid. A bid goes to all sellers, and it is the first seller to accept that nabs the trade.
Buyer’s can look through what is offered on the Vinfolio site, and then make a bid of any price.
There is no buyer’s premium; there is a seller’s premium of 20% if the wine is at the seller’s home, or 15% if the wine is already at Vinfolio.
Once the bid has been accepted the seller ships the wine to Vinfolio’s storage in California. The wine goes through a series of checks for condition (signs of seepage, label condition etc) and then if it passes, is shipped out to the buyer.
The trade is anonymous; the buyer does not know the identity of the seller.
Vinfolio also still offers its normal consignment business, where a seller can either consign wine to Vinfolio for selling, or sell it to them outright.

Elin McCoy on Bloomberg covered the new offering . In a wholly positive article she outlined some of the statistics.

This is a virtual inventory of 12 million bottles (about 9.6 million in CellarTracker and the rest in VinCellar)
There are 53,000 users on VinCellar and 82, 000 users on CellarTracker
There are 400,000 different wines in CellarTracker, compared to 5,000 labels at Zachy’s

It is a different model. In all other auctions one is bidding on specific wine and the contract is clear that if you are the highest bidder you own the wine. In this case, it is a one-to-many (buyer to seller) transaction. The buyer makes a bid and the seller may or may not accept it. This is has both good and bad sides. The uncertainty of the transaction can be off-putting, but the number of sellers who can fulfill it are many.

The sheer scale of this venture and the inspired act of partnering with CellarTracker has created a phenomenon. Vinfolio and CellarTracker could easily of considered themselves competition (and in the case of cellar software management they are). However they were both able to see past it, and I’m certain that both entities will gain from this collaboration. I’m amazed that the wine blogging world has not lit up on this. The Elin McCoy article is the only one I found from a major wine figure. The benefit of this collaboration is especially meaningful for Winevestors. This is directly aimed at the everyman wine-geek who has a few, to a lot of bottles, of wine that they want to sell legally.

The most interesting thread I found was on a message board was at eBob. This was by far the most interesting thread I have ever seen on a wine message board, and, of course, as a result was eventually shut down by the moderators! In it, a very knowledgeable and opinionated group of wine-geeks threw brick-bats and plaudits at Stephen Bachmann and Eric LeVine (the CEOs of Vinfolio and CellarTracker respectively). In my real life I’m a product manager. The amount of information the two were able to glean from their user base in this one long thread was amazing. They each, (Mr Bachmann especially) put a huge amount of time into debating and explaining every aspect of their venture. In return they were able to really investigate what their user-base liked or disliked. In turn they moved quickly and openly used a number of the suggestions as changes to the product that they will roll out shortly. A hand-clap to the twosome for keeping their cool at some of the more aggressive comments from the community!

A few observations:

1/ The 20% seller’s commission seems high, especially when with volume discounts it will only come down another 2%. When considering the total: buyer and seller fees, (remember the buyers fee is 0%) it is not blatant. However if you are a seller only it may prove discouraging. Mr Bachmann was clear that this is the start of a journey for his company and he will market-correct. I think this percentage will come down in time, which will induce more people to participate.

2/ It is very easy for someone to put their whole cellar for sale (literally one check-box click). This means that a lot of wine appears to be for sale that are not really. No-one wants to sell their whole cellar. By putting a whole cellar u

8/2/2009 | Buying | Post comments | View comments | (1)