The online wine marketplace is likely a casualty of Amazon’s recent Whole Foods acquisition.
Amazon has built its reputation as the place to find everything. But when it comes to the highly government-regulated world of alcohol sales, “everything” may have proven to be a bit overzealous, and the massive online retailer is now shuttering its five-year-old Amazon Wine marketplace at the end of the year.
Emails went out to sellers yesterday informing them of the impending closure, according to TechCrunch, reportedly stating, “as Amazon continues to offer customers additional retail options for buying wine, we will no longer offer a marketplace for wine at this time, and Amazon Wine will close on December 31st, 2017.”
Though Amazon hasn’t released sales numbers as to how well its Wine service has performed, dozens of brands continue to use the marketplace including big names like the Martha Stewart Wine Company. Instead, the closure is likely due not to Amazon Wine’s own shortcomings, but to regulatory demands stemming from Amazon’s increasing alcohol sales in other parts of its business including those gained through the company’s acquisition of Whole Foods.
The crux of the issue is that Amazon Wine didn’t actually sell wine; the marketplace only served as a middleman between Amazon customers and wine brands, with orders being fulfilled by the wineries themselves. These companies would then pay Amazon a fee for its service. According to The Drinks Business, that fee can pose a problem if Amazon is also acting as a wine retailer through outlets like Amazon Fresh, Prime Now and newly-acquired Whole Foods since many states have laws that forbid alcohol sellers to receive payments to advertise products from other suppliers. Amazon had reportedly been attempting to work with regulators to resolve this conflict, but at this point, Amazon Wine was apparently seen as the more disposable sales outlet.
“Wine will continue to be offered through Amazon Fresh, Prime Now and Whole Foods Markets,” Amazon reportedly also stated in its email.
That last statement is important: Even though Amazon Wine is being shut down, this decision shouldn’t be misconstrued to mean that Amazon is getting out of the wine business. Quite the contrary: In theory, shedding the legal conflict of operating a wine marketplace should leave Amazon less encumbered when selling wine moving forward. So it’s possible the move could actually foreshadow Amazon ramping up other wine sales in a big way.