What “Amazon Effect?” Wholesalers Conflate Issues

Wholesalers and retailers have a new boogeyman to scare legislators.  It’s called Amazon. And in a few states they are conflating the so-called “Amazon effect” to prevent the expansion of consumer choice with winery direct shipping.

The only problem is that it fails the simplest fact checking.

Here’s how they use the story line: They get a news outlet like the Delaware Business Journal to interview a retailer who wonders rhetorically, “Isn’t it a problem there’s so much empty retail store space in North Wilmington?” (“Retailers fear Amazon effect with direct wine shipments,” June 8, 2018)  Readers answer “yes!” and make the illogical leap that direct-to-consumer wine shipments from Amazon and others take business away from local wine retailers which leads to empty stores and lost jobs. In other words, this presumes that direct wine shipping is a zero sum game. Voila!  Legislators have what appears to be a sound argument to maintain bans on wine shipments directly from wineries to consumers.

What’s not being made clear by journalists is, first, that Amazon shut down their winery-to-consumer sales platform last year.  Since the end of 2017 Amazonwine.com is no longer in the business of facilitating shipments from wineries to consumers.  But wait!  Amazon bought Whole Foods in 2017.  “Doesn’t that mean Amazon will hurt wine sales in DE?”

A journalist should then wonder whether Amazon/Whole Foods actually ship (using UPS or FedEx) wine to consumers. The answer is no. Amazon/Whole Foods does not ship wine, although they are expanding home delivery of wines.  In fact, wholesalers have supported such deliveries with their investment in Drizly, for example, a home delivery service for wine, beer and spirits. The follow up question is “How many Amazon/Whole Foods stores are there in Delaware to compete with local retailers?” Answer: none.

The final question is: “Aren’t wines that might be delivered to consumers’ homes by Whole Foods purchased through wholesalers?” Answer: yes.  Whole Foods has access to the same wines as all other retailers because they must buy from Delaware wholesalers, who, at least for now, decide what wines Delaware consumers can purchase.

Therefore, Amazon and their Whole Foods subsidiary have nothing to do with Delaware wine sales that might be lost if wine is shipped directly from wineries to consumers. The “Amazon effect” here is a lame argument, but the threat of job losses, regardless of whether they will happen, resonates with legislators.

Simply put, Delaware wholesalers don’t want direct wine shipping into Delaware. They want 100% control over what consumers there drink.