The story of Winc reflects the challenges of selling alcohol online in the U.S. The company produces and sells wine via direct-to-consumer memberships and wholesale to physical retailers. It launched in 2011 as Club W, rebranded to Winc in 2016, adopted in-house-only products, and went public in 2021. The stock (NYSE: WBEV) sells at 32 cents per share.
Jai Dolwani is Winc’s chief marketing officer, responsible for DTC sales, ecommerce, and engineering and technology — among other roles.
He and I recently discussed Winc’s journey and his role in the company. Our entire audio conversation is embedded below. The transcript is edited for clarity and length.
Eric Bandholz: Tell us about what you do.
Jai Dolwani: I’m a chief marketing officer at Winc, a wine-club membership company. We sell direct-to-consumer and wholesale at Trader Joe’s, Whole Foods Market, Target, restaurants, and bars. We have a few dozen in-house brands on our site, and we’re building a portfolio of wines focused on the next generation of consumers.
We sell only our own products and have a team of incredible winemakers. We launched in 2011 as Club W. In 2016, before I arrived, we re-branded to Winc. That’s when we shifted from selling third-party wines to creating in-house products and brands.
We don’t own vineyards or production facilities. We buy grapes directly from growers. Our wine-making team is responsible for the end-to-end process of getting that into a bottle.
Selling alcohol online is a difficult business. Shipping it is equally difficult owing to the weight and fragility.
U.S. laws surrounding the sale of beverage alcohol date to the 1920s prohibition era. It’s a three-tier distribution system of complex rules and regulations.
For example, some states have lifetime caps on the amount of alcohol to ship into that region. We can no longer ship there once we’ve hit a specific lifetime value — ever. For other states, it depends on where the wine was produced or bottled.
Plus, states have various marketing regulations. We can say “shipping included” and “zero-dollar shipping” but not “free shipping.”
Bandholz: You have an innovative subscription model.
Dolwani: Two years ago, we transitioned to a credits-based system. We acquire subscriptions through a discounted first-time purchase. After that, customers receive 60 credits on their accounts every month. Those credits roll over and never expire. Customers do not have to order every month.
We previously had the traditional model of receiving four wines every month or every quarter. But with automatic shipments, we had a lot of delivery headaches as, by law, customers had to be home to sign for the shipment.
We switched to the credit model for that reason and from customer feedback.
An added benefit of the new system is better engagement. Digital customers coming to the site, viewing our products, and selecting what they want provides key data on what has the best chance of success in physical wholesale channels.
Bandholz: What happens if customers don’t use their credits?
Dolwani: We want buyers to use 100% of their credits. If they’re not using the product, they will not be a long-term customer. We’re consistently emailing them if they have unused credits, saying, “You have a lot of credits. You should probably use them.” If they’re unresponsive to emails, we’ll offer incentives and, also, use direct mail.
But it’s a tricky balance. Reminding customers of unused credits can prompt them to cancel, as they aren’t using the service. So it’s important to communicate in a way that’s merchandised and product-forward, not necessarily highlighting large discounts or the lack of use.
Bandholz: Tell us more about customer acquisition.
Dolwani: We have a traditional, three-fold mix — Facebook, Google, and affiliates. Our ability to scale on Facebook through iOS 14.5 and increased shipping costs was possible only because of continuous improvements on ad creatives and looking at the sales funnel holistically.
In June 2021, we overhauled all of our advertising to use creators and landing pages with better ad-to-page relevancy. We retooled our entire acquisition funnel for the next generation.
Looking at the entire funnel helps keep Facebook a big part of our mix. Google is steady. It doesn’t scale too far up or down.
Our affiliate network has been huge for us. It accounts for a good, reliable portion of our customer acquisition. Using pay-per-post influencers was incredibly successful for us. But much of the engagement shifted from Instagram Stories to TikTok.
Bandholz: Where can listeners support you?
Editor’s note: Winc filed for Chapter 11 bankruptcy shortly after we published this interview.