Why Is eBay Opening An Online Wine Shop?

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eBay (NASDAQ:EBAY)  recently announced that it is launching a new destination on its platform called eBay Wine where users can browse for a wide selection of wines including collectibles, rare and everyday wines for all occasions and purchase them online. The company is partnering with Drync,  a mobile app platform for wine, to bring a wide selection of wines to its U.S. shoppers through Drync’s retail network.  In addition to the ability to buy wines online in the U.S., the company will also provide an auction format for rare bottles and a store pick option. Buyers will also have access to expert guides and tips on emerging wine trends and must-have accessories. While selling wine via the Internet is still at a nascent stage, Amazon already has an established presence in this market. As eBay works towards improving its product inventory for buyers, a curated wine collection can definitely enrich its offering and attract buyers to its platform.

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Online Wine Market Holds Huge Growth Potential

E-commerce in wine is still at a nascent stage and, according to a survey conducted by Nielsen’s Retail Consulting and Analytics Group in June 2015, only 5% of consumers intended to buy wine online in the next six months. However there is a lot of growth potential in this space as millennials (consumers aged 21-34), who are more active online shoppers, are likely to fuel e-commerce growth in wine in the future.  According to IBIS World, boosted by demand from millennials, the online alcohol market is estimated to reach $ 1.4 billion by 2020. While eBay faces competition from Amazon in this space, the company can gain significant market share in wine e-commerce, if it is able to provide a better selection and more convenient shipping options.  Such share accretion should boost  revenue growth as well.

Unique, Differentiated Product Offering

eBay is looking to increase the product offering on its platform by including unique and differentiated products and rare wines can fit this bill, attracting more buyers to its marketplace. eBay wines currently offers shoppers an option to choose from 10,000 different wines, ranging from vintage to everyday wines, thus enhancing the company’s product inventory. The wines are from over 500 regions ranging from Abruzzo to Wairarpa and in all price ranges.  This variety and range whould appeal to a wide range of customers, from the most dedicated to the most casual.  As e commerce in the wine industry picks up and eBay works on its goal of providing a rich inventory on its platform to attract shoppers, these shoppers are likely to boost to the company’s revenues in the long term.