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Amazon to sell wines online

Technology company giant Amazon is reportedly planning to sell, among other things, wine. The Wall Street Journal reports that Amazon will be launching a marketplace for wine in the coming weeks.

The report mentions the company’s executives in Napa this week who met with over 100 different wineries and giving information about the planned launch. The meeting was presided by Amazon’s Derrick Peters, who was a former business consultant, manager, and a previous marketing director for wine maker Beam Inc.

Amazon will reportedly get a 15% cut on sales on top of the $40 fee to join the marketplace.

The wineries involved signed some sort of a nondisclosure agreement. The plan may work well for wineries  as working with such a massive company as Amazon can have its perks including lower shipping fees of products although they will be responsible for handling and delivery. A third-party marketplace will be created for wines and wineries will be able to list their wines through Amazon.

Amazon had already tried this venture in 2009 but its partner company happened to hit hard times and had to bail out before the operation even started. New Vine Logistics, Amazon’s shipping partner, stopped its operations in 2009. Amazon did learn a lesson out of that failed undertaking and is now putting responsibilities in shipping to the shoulders of the wineries themselves.

There will certainly be regulatory issues to address as different states have their own separate rules when it comes to selling and delivering wines. The online retailer is still trying to work a deal with shipping and compliance companies at this time although no shipping rate has been stipulated yet. Selling wine online is a tricky business because of many different state-specific rules that can restrict companies to sell alcoholic beverages. Also, shippers must ensure that recipients signing the packages should be 21-years old, which is the legal limit.

Wine sales online only represents about 1% of the total wine sales in the United States, based on statistics provided by Wine.com.

source: wsj