A letter from the Wine.com CEO to our customers & suppliers

Hi folks,

I’ve received several calls and emails today about a blog post full of false information about Wine.com.  I’d normally ignore something like this and get on with my day, but my team has worked too hard building Wine.com to not respond.

Is Wine.com for sale?
We’re majority owned by a private equity fund that makes money by buying and selling companies.  So we’re basically always for sale and that has always been the case.  Beyond that, we never comment on specific M&A or funding activity because that’s private business.

Is Wine.com struggling?
There’s no question wine is a challenging category online, due to regulatory constraints, shipping heavy glass bottles, extreme weather concerns and adult signatures required for delivery.  So the answer to this question has three parts:

Part 1 – pre turnaround
This company was founded as eVineyard.com in 1998 by Mike Osborn, who runs our Merchandising to this day, and has developed deep, trusting relationships with our hundreds of suppliers and wholesalers.

There was a lot of failed investment activity in online wine in the late 1990’s (see timeline below), but eVineyard was on the sidelines in Portland, going slower, trying to figure out the right business model.  When the original Wine.com combined with Virtual Vineyards and WineShopper, then all went out of business in 2001, eVineyard bought the Wine.com and WineShopper names.

Yesterday’s blog post provided quotes from people running the company from 2002 to fall of 2005 (the blogger from Growth Capitalist didn’t call me, by the way).  As of fall 2005, the company was losing $15M of EBITDA on $35 million in revenue, and had a break-even point of over $200 million in revenue.

So yes, you bet Wine.com was struggling.

Part 2 – turnaround
I joined Mike and his team in 2006 because I saw a category that consumers wanted to buy online, healthy customer and supplier relations and a great team that had been mismanaged.  We got to work on our cost structure, reducing our break-even point from over $200 million in revenue to $45 million.  Then we went to work on our customer experience – adding to our wine assortment, improving our pricing & value, making delivery more convenient and reliable, and adding tools and content to give customers confidence in their wine buying decisions.  In fall of 2007 we took in our last round of external financing, $5 million, and have been self-sufficient ever since.

Despite the recession, we turned cash flow positive in 2009 and EBITDA positive in 2010 on $45 million in revenue.  We closed our fiscal year in March 2011 with $1.9 million in cash flow on revenue of $56 million.

Turnaround complete – Wine.com no longer struggling.

Part 3 – growth
Now the fun part.  We decided (with our board) to re-invest all cash generated from internal operations into laying the foundation for future growth.  Wine is underpenetrated online, and it’s a $35 billion category in the US.  What investments could we make in our customer experience that would create greater loyalty and growth?

We doubled our selection of 90 point scoring wines under $20, grew our fine wine & collectibles, added Bordeaux futures and our Collector Concierge service, revamped our gift sets & baskets, introduced same-day shipment, weather-safe shipping and date-certain delivery, launched our ipad app, mobile site and WineShopper daily deal site, and created our Steward-Ship loyalty program ($49 for a year of unlimited shipping).

Customers responded.  Over the last four years, website traffic grew 2.4 times to over 15.6 million visits.  Bottles sold and shipped nearly doubled to 2.7 million.  Lifetime customer value grew 50%.  And revenue grew 70% to $75 million.  All while inventory turns increased to 12 times and net fulfillment cost per order dropped by 75%.

Double-digit growth continues today, and we’re more bullish than ever about our innovation pipeline.

If Wine.com is doing fine, what’s up with this blog post?
You’ve got me.  The blogger didn’t contact me to check her facts, and only seems to have spoken with a couple unhappy people who I don’t even know who worked here nearly a decade ago.  All I can say is the Wine.com team has moved on from whatever drama occurred under their watch.  And we’re excited to continue to innovate, wow our customers and partner with our suppliers for many years to come.


Rich Bergsund
CEO, Wine.com
July 2, 2013












Online wine industry timeline:
January 1995: Virtual Vineyards launches

June 1998: Today’s Wine.com originally founded as eVineyard

September 1999: Virtual Vineyards acquires Wine.com domain name

April 2000: Amazon launches WineShopper

August 2000: WineShopper & Wine.com merge

April 2001: eVineyard acquired the assets of Virtual Vineyards/Wine.com/WineShopper:

Wine.com leadership timeline:

Chairman of the Board
Larry Gerhard (May 1999 – May 2002)
Chris Kitze (May 2002- August 2005)
Rob Manning, Baker Capital (August 2005 to present)

Larry Gerhard (May 1999 – February 2002)
Peter Ekman (February 2002 to April 2004)
George Garrick (May 2004 to September 2005)
Rich Bergsund (June 2006 to present)

4 thoughts on “A letter from the Wine.com CEO to our customers & suppliers”

  1. Rich- Thanks for the clarify info. Looks like a real success story to me. You, Mike and the whole team should be very proud of the company you’ve built. -Dennis

  2. Good for you Rich. Anyone that can achieve what you’ve accomplished is no doubt a hero in an undermanned battle. Unfortunately the blogger world is one that can often be unsubtantiated with nonsense and unchecked facts.

    One thing that you forgot to add is what Wine.com is doing to try to help give consumers a wider selection, which is no doubt limited to the regulations that prohibit wine shipments by retailers. If you can expand on that somehow down the road, Im sure your loyalty base will increase.

    For those who wish to learn more about how you can get wines shipped to you from a retailer OR a winery, please check out the following site : http://www.wineconsumers.org


    Alex Andrawes
    CEO, Personal Wine

  3. Rich,
    Congrats for telling your own story and cutting through the misinformation. Having done business with Wine.com for many years, you are without question the de-facto on line source. Thanks for the transparency and clarification.
    Richard Genova/Vintage Epicure,llc

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