"They've tried to focus in on having good price points, since a lot of the users tend to be a younger type of audience, and they don't want to just have $95 bottles of cab," said Milton Cornwell, acting general manager of Copper Peak Logistics, which ships some of Facebook's wine orders from its warehouse in American Canyon.
While hopes are high among vendors featured on the gift section, and among stockholders who have seen their share price decline after the company's IPO, there are no guarantees that Facebook will be able to successfully monetize its massive user base.
"Truthfully, Facebook is a place where you would give a gift to a casual friend, not to a close friend," said Michael Pachter, an analyst with Wedbush Securities, adding that his wife would not be happy if he sent her a bouquet of flowers that way.
"It's kind of an impersonal way to send a gift if you do it through Facebook," Pachter said. "I don't expect that we're going to see really meaningful, expensive wines given. ... I think the guys who sell $10 wine will fly, but the guys who sell $100 wines are probably not going to be that successful because you would actually do that outside of Facebook."
Among the brands now available on Facebook are Clos du Bois, Wild Horse and Robert Mondavi, all owned by beverage giant Constellation, and offerings from smaller wineries like Titus Vineyards in St. Helena, which generally produces less than 10,000 cases of wine per year.
While orders are placed through Facebook, each sale is funneled through ShipCompliant, which provides software to companies to help navigate complicated direct shipping rules. Wineries then approve the sale and can ship to those states where they are licensed. Depending on the winery, it can be shipped to as few as 16 states or more than 30.
"Facebook to us is just another amazing opportunity to be able to be where the customer is, and offer the right product at the right time to the right person," said Stacy Bennett, vice president of digital marketing for J Vineyards and Winery.
"The power, it's incredible," Bennett continued. "Your friend's birthday is today, and they happen to have liked a specific product on their timeline, and what a perfect opportunity to give them a gift of something they like. And they open it three seconds later. It's mind boggling."
J is not yet selling wine on Facebook, but it is in the process of getting on board with the company, Bennett said.
So far, wineries enrolled in the Facebook program have yet to see the kind of sales that would make a significant impact on their bottom line.
"It's off to a little bit of a slow start," said Victoria Amato, marketing manager of Blackbird Vineyards in Napa. "I think a lot of companies, not just wineries, that are selling gifts higher than the $5 to $10 price point are seeing slower sales than they expected."
Blackbird has been selling three or four orders of wine per day through Facebook, with orders generally ranging from one to three bottles, said Dwight Harrington, operations director. In the best case scenario, that's about 1 percent of the winery's 10,000 cases per year.
The winery originally planned to sell on Amazon.com but eventually decided not to because Amazon would have discounted its wines, and those lower prices would be easily searchable online, Harrington said.
"They're so price driven. So we would have to offer our wines to them at a much lower rate, and they might offer them at a lower retail value" than their regular price, Harrington said. "Whereas Facebook, it's the same standard retail price that we have, so it's more fair."
Prices for the wines range from about $15 to $100, and shipping is an additional cost. Facebook, the winery and ShipCompliant all get a percentage of the sale, but the share that each receive is not publicly disclosed, sources said.
"Social media is a very hot issue in the wine industry right now, as we're all trying to connect with the elusive Gen X and Millenials," said Christophe Smith, director of sales and marketing at Titus Vineyards in St. Helena, and chair of the social media committee for the Napa Valley Vintners. "So what better way than to work with Facebook? It's really a huge exposure opportunity."
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