September 27th, 2012
Editor’s Note: The following post is part of our series on the Third Party Providers
The rapid emergence of online wine marketers might be the biggest innovation in wine sales over the past five years. But selling and marketing your wine through these third-party channels poses many compliance and business-related challenges. That’s why we’ve put together this comprehensive 5-point checklist to help you sell through third-party marketers efficiently, compliantly and profitably.
1. Know Your Why
There are lots of great business reasons why wineries work through third-party marketers to sell their wine. It could be to move excess supply, help launch a new brand or label, power your social media efforts, or perhaps target a new demographic. And not all marketers are alike.The first thing you need to ask yourself is “Why?” Understanding this will help you best determine which marketer is best positioned to help you reach your business goals.
Key Questions to Ask:
- Which online marketers are best able to attract my target customers?
- How much inventory should I dedicate to this?
- Which type of online marketer best satisfies our business objectives – a daily deal site, social shopping, niche wine site or a mass market platform?
- How would my brand be impacted across these different options?
2. Know Your ABCs
From a compliance perspective, selling wine through third-party marketers had been somewhat of a gray matter until the release of a very important advisory from the California ABC last fall. In the advisory, the ABC provided clear guidance on how wineries and third-party marketers can work together in a compliant fashion. The guidance covers everything from pricing to fulfillment to disbursement. Luckily, there’s a great blog post that breaks down the full advisory, so you know exactly what landmines to look for.
Key Questions to Ask:
- Is my third-party marketer familiar with the ABC advisory?
- Have they considered the ABC’s guidance in how they’ve constructed their service?
- Am I assured that I won’t be putting my license at risk?
3. Know How Funds Get Handled
When working with third-party marketers, payments and disbursements can often be the trickiest steps of the process. In order to follow the guidelines set forth in the ABC advisory, the licensee must be in full control over all aspects of each transaction. This can be hard to balance as third-party marketers typically secure the credit card info and payment authorization. So make sure the process by which funds are collected and transferred is crystal clear.
Key Questions to Ask:
- What’s the checkout experience like from a user perspective?
- When do I take control of the order funds?
- Am I fully in control of the funds throughout the entire process?
- How are the marketing fees structured and when are they paid?
- How will taxes get calculated, collected and paid?
4. Know How Compliance Gets Handled
In online shopping environments where customers are used to lightning fast checkouts and no additional actions are needed, compliance checks can also be a very delicate thing to handle. Technology has now evolved to a point that holistic compliance checks and tax rate calculations can happen in real-time; online orders can also be automatically bundled into your overall numbers for state reporting, but the third-party marketer must work in close concert with your compliance provider. If you want to keep your back-office paperwork to a minimum, this point is truly important.
Key Questions to Ask:
- Is the third-party marketer integrated with our compliance solution?
- If not integrated, how will orders get checked for compliance? How quickly can it occur after transaction?
- How do I consider my other direct shipments when evaluating the compliance of these orders?
- If the transaction is found to be out-of-compliance, how does that get communicated back to the customer?
- How do I retrieve the order information needed to aggregate and consolidate for tax and shipping reports?
5. Know How To Measure Success
In addition to the hard costs involved in selling through third-party marketers, there are several soft costs to consider as well. Namely, how much time will it take for me and my staff to launch and maintain this sales channel? Make sure mechanisms are also in place to measure progress towards your original business objectives, whether it’s tracking new Facebook fans, wine club members, or net proceeds on a certain batch of inventory.
Key Questions to Ask:
- Did this third-party marketer help us achieve our original objectives?
- What would make working with this third-party marketer an easier process?
- Was our brand well represented through the entire marketing, transaction and distribution process?
- What information will I receive about the customers who buy through this marketer?
At ShipCompliant, we believe compliance should never get in the way of your success in the wine industry. That’s why we’re intently focused on making sure you’re fully aware of both the potential and risk involved with selling through online wine marketers.
If you feel that you are ready to engage in selling your wine through third-party marketers, we’d be happy to answer any questions that you have or introduce you to similar sized wineries that have already navigated these waters and experienced success. Learn more about ShipCompliant MarketPlace.
- California ABC Advisory
- Understanding the California ABC’s New Advisory for Wineries and Third Party Providers
- California ABC Takes Action to Help California Businesses (Press Release)
August 23rd, 2012
Alcohol Tax Filers who pay Georgia Excise Tax or related Georgia license fees will be required to file and renew online beginning September 2012 through the Georgia Tax Center (GTC). The Georgia Department of Revenue (GDOR) has sent out a notice stating that businesses can begin managing their alcohol tax account with the GTC and access the new e-file templates starting September 4, 2012, in time to file August 2012 monthly tax returns.
Affected alcohol returns include, but are not limited to:
- Georgia ATT-7SP Excise Tax Return
- Georgia ATT-11 Monthly Report of Distilled Spirits Shipments to Wholesalers
- Georgia ATT-112 Report of Wine Shipments
The state sent out a second notice this week containing instructions on how to create a GTC login or add a license account to an existing login. Also noteworthy, those intending to renew their alcohol-related licenses will be expected to do so through their new GTC online account for the renewal period beginning September 4, 2012 and ending November 1, 2012.
Georgia’s announcement to go paperless joins the ranks of other online state filing systems such as Wisconsin and Ohio.
July 19th, 2012
Washington now allows an optional annual filing of wine tax for wineries whose total sales into Washington are less than 6,000 gallons annually (roughly 2,500 cases). Wineries that exceed the 6,000 gallon limit, however, must continue to file monthly returns. This new allowance comes after the passage of SB 5259, a bill that passed in March and officially came into effect in June of this year. Bright yellow postcards were recently sent out by the Liquor Control Board (LCB) to qualifying wineries, along with instructions on how to change to the new frequency.
Senate and House Bill Reports on SB 5259 state that the passage of the bill is expected to benefit an estimated 300-400 wineries, simplify the reporting process and save time and effort. The state will benefit as well, as processing returns and payments for small dollar amounts can prove costly for the state.
How to Notify the State
Wineries who file the LIQ-774 (in-state wineries) and holders of the Certificate of Approval (COA) who file the LIQ-778 or the LIQ-870 (direct wine shippers) expecting to sell less than 6,000 gallons in Washington this year can sign up to file annually for the remainder of 2012 by emailing firstname.lastname@example.org. July 20 is the deadline for notifying the Liquor Board of intention to file annually for the remainder of the 2012 calendar year, so wineries should submit their requests to the LCB as soon as possible. In this email, specific account information should be included:
- Name and phone number of the individual who files the returns
- Trade name of the winery
- COA number (or winery license number for in-state wineries)
- Whether or not June 2012 sales have already been filed
The annual report for the remainder of 2012 may include sales from June through December. However, wineries that have already filed for the month of June will file the annual report beginning with July’s sales. If wineries would prefer to file annually beginning in January, this same process can be followed to change the filing frequency before the beginning of each new year.
Questions? Please contact the Washington State Liquor Control Board directly, or comment below.
July 13th, 2012
In 2011, over 146,000 alcoholic beverage label applications were submitted to the Department of the Treasury Alcohol and Tobacco Tax and Trade Bureau (TTB), an almost 10% increase from the prior year. Yet, while the amount of label applications goes up, the resources available to the TTB for processing these applications goes down due to budget cuts. The need to get a product to market as fast as possible comes in conflict with the importance of keeping alcohol beverage products in compliance with federal labeling regulations. As more applications are submitted, the risk for a crippling review process increases. Currently, spirits and wine applicants must wait 28 to 30 days respectively on a pending label application, a particularly aggravating ordeal for applicants wishing to make minor changes to an existing label.
For example, did your marketing department want to add an award to that COLA you just got approved last week? Is the logo of your winery just a tad too far to the left? Did your 2012 Chardonnay increase in alcohol content from 13.5% ABV to 15% ABV? Is the idea of waiting a month to get a new COLA for any of these scenarios leaving you feeling queasy, too? Well, never fear, the TTB doesn’t like the idea of waiting for a new COLA in these situations either. On July 5, 2012, the TTB unveiled the latest Application for Certification/Exemption of Label/Bottle Approval, Form 5100.31. With a longer list of allowable revisions, the TTB anticipates a decrease in the amount of submitted label applications. With a decrease in the amount of submitted label applications, labels for new products and products with major changes can be reviewed faster. At least, that’s the idea behind the effort put into revising the application.
A key component to the success of these changes depends largely on industry members utilizing their new found label freedoms. Because the entire application process requires no fees, there is a potential risk that many applicants won’t take the time to educate themselves on these new allowable revisions, and instead continue to flood the pool of submitted COLA applications with unnecessary requests for additional COLA approvals. In order for this process to work efficiently, industry members need to understand these updates. Two resources from the TTB are, “Allowable Changes to Approved Labels”, which displays examples of allowable revisions and, “TTB Public Guidance 2012-2”, which simplifies the language of the “Allowable Revisions to Approved Labels” table. By utilizing this new form to its utmost potential, along with many other proposed changes outlined on the TTB page devoted to COLA streamlining efforts, the industry may see a faster and easier application process in the near future.
Here is a quick comparison of the new and old table of Allowable Revisions, with updates highlighted in red:
What are your thoughts on the new form 5100.31?
May 15th, 2012
ShipCompliant launched its first Direct Shipping Seminar & Users Conference in 2006, one year after the groundbreaking Granholm v. Heald Supreme Court ruling that put the framework in place for the direct shipping landscape as we know it today. Since the 2005 ruling, 26 new states have opened or adopted a new permit system for direct shipping, which represents a 56% increase in total reports due for wineries that ship to all available states. Today a total of 40 states—89% of the total consumer market—allow direct shipping!
Over the past 7 years, there have been some considerable advances in direct shipping laws and regulations for wineries and consumers alike, but the road hasn’t been straight and narrow. As states work to adapt their laws amidst shrinking budgets while simultaneously balancing consumer demand and local business interests, a number of outstanding issues continue to be debated in the industry including state mandated production capacity caps, on-site requirements, and the emerging practice of partnering with third-party marketers.
ShipCompliant stays abreast of the ongoing legislative and regulatory changes and provides education and training for wineries to operate compliantly in this ever-changing, and sometimes confusing, environment. Every year for the past six years, ShipCompliant has brought together wine industry professionals, state representatives, direct shipping experts and business leaders to discuss ongoing changes at its annual conference, now known as DIRECT.
DIRECT 2012 is ShipCompliant’s 7th annual conference and will take place on June 14 at the Napa Valley Marriott. This conference is one of the industry’s leading forums for those involved in direct sales to hear the latest industry updates and new best practices. Wineries will learn ways to gain loyal customers and maximize profitability as well as hear industry experts address new and upcoming changes in the legislative regulatory landscapes.
Confirmed sessions include:
- State-by-State Legislative Updates
- The State of Direct Shipping by the Numbers: Who’s buying? Who’s shipping? What’s selling? Where’s it going?
- How to Build Sales Profitably and Compliantly with Third-Party Marketers
- Product Registrations and COLA Filings Done Fast & Easy
- Regulations and Compliance: Privatization, COLA rules and USPS Shipping
- The Future of the Wine Industry: The Vision of the Visionaries
See a complete list of sessions and speakers at www.shipcompliant.com/events.
Early-bird registration ends Friday, May 18th.