Often misunderstood, Fulfillment Houses play a key role in meeting consumer demand for winery-to-consumer direct shipping.
These logistics centers provide both economic and environmental benefits to their clients, wineries. Here is a summary.
WHAT
A Fulfillment House provides winery direct-to-consumer shipping services to its clients, wineries. FHs do not buy or sell wine; they do not own the wine; they do not transact directly with consumers. FHs are logistics centers that act as agents for their winery clients. They store wine, and pack wine boxes for pick-up and shipment by the common carriers (e.g., FedEx, UPS) as instructed by their winery clients.
WHY
Fulfillment Houses offer wineries an efficient, economical, and environmentally sustainable logistics solution for satisfying consumer demand for their client’s wines. FHs provide warehousing, staffing, and logistics services at a much lower cost than if wineries managed these services in-house. Such off-site warehousing is especially important in areas with restrictions such as agricultural preserves, where winery square footage and traffic volumes are often limited. FHs also reduce truck traffic and total shipping mileage by centralizing warehousing in wine regions, as well as holding regional warehouses to reduce total shipment mileage.
LICENSING
Fulfillment Houses are independent companies licensed in their state of operation. In some states, like California, the state’s alcohol regulators recognize FHs as an extension of a winery’s license to direct ship wine. For example, in California, FHs hold a state-issued Type 14 Public Warehouse license. FHs originally developed to provide storage and logistics for wines destined for pickup by wholesaler middlemen and eventual delivery to retailers and restaurant accounts, and still serve those functions today. As the DTC market expanded, FHs realized they could also provide these additional services for direct-to-consumer shipments. Note that a type 14 warehouse in California, or a similar type warehouse in other states, are not required to hold a bond because they are holding product on which both State and Federal excise tax has already been paid. This tax is paid by the winery and demonstrates compliance with the state's regulations and tax requirements.
WHERE
Fulfillment Houses are located throughout the U.S. but may have several regional locations to reduce total shipment mileage.
HOW MUCH
There are less than a dozen Fulfillment Houses that service the majority of wineries. FHs are an integral part of legal, regulated DTC shipping and are responsible for more than half of all wines shipped directly to consumers in some states. Companies providing FH services to wineries include Wineshipping, WineDirect, Copper Peak Logistics, and others.
REPORTING
State alcohol regulators can monitor DTC shipments to their states by using the unique shipping tracking number on each shipment—provided by wineries, FHs, and common carriers – which is a statutory requirement in some states. In this way, they can remove any potential confusion that could arise when a fulfillment house’s address is reported as the source of a shipment. The state can be assured that it was a legitimate shipment by a licensed party that has properly complied with the state’s regulations and tax requirements.
RESOURCES
https://sovos.com/blog/ship/dont-fear-the-fulfillment-house/ https://www.winedirect.com/products/fulfillment/
https://wineshipping.com/solutions/
https://copperpeaklogistics.com/
