Being in business today is challenging. We could go into a lot of detail about costs of doing business, fierce competition, and the constant exposure in a world where everyone has an opinion and posts it on Yelp without fear of recourse no matter how outlandish, incorrect or vindictive. Are we bitter? No, we’re doing fine in these turbulent waters. That’s just the way it is, and everyone has to deal with it.
The world is a different place than it was a few decades ago, and technology has sped up the cycles of change and empowered the everyman to speak his mind whether they know what they’re talking about or not. Again, that’s just the way it is. Back in college (about 100 years ago) we recall being in some pretty heated discussions in business school about the coming age of consumerism. It just seemed like the children of the 60s questioned everything, including whether or not companies could run roughshod over the public with impunity any more.
What followed were drastic changes in consumer laws, Ralph Nader, and having to sign a mountain of paperwork just to have your teeth cleaned. It’s a better world, right? Company practices are much more consumer friendly and fair (United Airlines not withstanding) and things like the ‘cooling off period’ and liberal ‘return policies’ are all there to protect consumers against themselves. Even so, there still seems to be an itchy trigger finger when it comes to decrying someone’s business practices.
“you should always assume stupidity and ignorance before maliciousness”
It’s as if there is some sort of mass paranoia that all businesses are out to deceive the public. These days it only takes a couple of chat-room threads to turn something into a full blown brouhaha. Yet in this day and age, when the consumer is allowed every opportunity to back out of a purchase, retailers are vilified for things that could have just been mistakes by employees. We jumped to the defense of a competitor for being slammed on the news for ‘deceptive practices’ because some shelf talkers on wines were misplaced or were for a prior vintage. If it were intentional, to what end? Ticking off consumers is not good policy. Likely errors or lack of diligence by employee were the cause. Our creative director Patrick has a good saying that “you should always assume stupidity and ignorance before maliciousness”. Seems like a pretty useful mantra for life in general, no?
This particular rant came about because we recently read Amazon was being chastised for misstating the ‘regular prices’ on items to make their ‘sale’ price look more attractive. We can’t imagine why a company that visible and that clearly in a position of power would do that. The accusation apparently stemmed from them quoting ‘regular prices’ that were not actually out there. Apparently some conspiracy theorist found a price that was a couple of bucks lower somewhere (without noting if there were special discounts from the manufacturer, coupons, club membership allowances or any one of a thousand other tactics used to make people think they are getting a deal) from the other source. Suddenly Amazon was a bad guy. Really? Frankly, in the end, all that really matters is the final price, and whether it is 38.9% off or 41.6% really isn’t the issue.
Clearly Amazon doesn’t need our help. They surely have a phalanx of lawyers for this sort of thing, and maybe they didn’t actually, or intentionally, do anything wrong. But there seems to always be someone willing to rattle a saber and defend the common man, and some news agency looking for a headline. That is the world we live in. Hey, a lot of folks offer deals in the wine business, too, and use ‘regular price’ as a barometer to demonstrate the magnitude of the discount. No doubt there are people that are ready to pounce there, too, on some perceived misrepresentation of price.
Now we aren’t saying all wine merchants are saints. Quite the contrary, some shoot prices for merchandise they don’t actually have and some, yes, state an inflated price to make their deal look juicier. For our part, we make every effort to find a real price before we bring it up. With wine, there are industry wide standards for pricing, although even those are becoming more ‘fluid’ as wineries trying to sell direct to consumers undercut their own retail prices with gimmicks like club member prices etc. So if the ‘retail’ price per bottle is $200, but anyone can call up on the phone and ‘join’ a ‘club’ for no cost and get the same bottle for the ‘membership price’ of $175, what then is the real price?
For the record, the standard markup for the wine industry is as follows, and we aren’t going to confuse the issue by calling the result a ‘markup’, ‘mark on’ or ‘margin’. If a wine costs $10 wholesale (before any discounts or allowances), the ‘list’ price is $15, whatever you choose to call it. Other businesses (jewelry, clothing, luxury accessories, etc) are substantially higher. When a retailer buys direct from the winery, on a wholesale basis, that structure is traditionally the assumption. Now once there are other parties involved (like a distributor or broker), the numbers can play out a little differently because there are more fingers in the pie and different parameters. The ‘base’ price can change and that might cause the presumed ‘retail’ to be a little different.
Thus if a distributor took a little extra bump, say $11 wholesale, and there was no winery price guidance, then the ‘stated’ retail price would be more like $16.50. A very common occurrence is on out of state shipments, where the f.o.b. (freight on board) price of wine from California to say Texas, or Washington to California, is slightly higher than the direct ship price within the state. Given a higher cost, a retailer might state the ‘retail price’ based on a higher cost. Re they inflating the price? Not necessarily. Imports are even dicier because of the varied shipping cost not only from the point of origin to the U.S., but to whichever coast or parts in between the wine eventually goes within the U.S. So what’s the real price? It’s not always that easy to determine.
We get it. There is a lot of skepticism about how businesses operate. There are a few bad apples, this is true. But sometimes actually determining the ‘retail’ price isn’t that easy. Are we defending Amazon? Not exactly. More to the point, while we aren’t naïve, we don’t think everyone is out to get you. People are far too inclined to point to a couple of minor mistakes over thousands of products and suggest there is institutional deception happening. Yeah, we have a few people that do that in our business, too, but only a few.
In the end if you are getting a superior product for a better price, isn’t that the issue? But what about those price search engines like wine-searcher? Well even those aren’t definitive for establishing a true ‘list’ price because the range can sometimes be 40-50% between the top and the bottom of the range of a wine’s price, and that’s without even knowing if all of the prices are backed by actual physical inventory or what the provenance of the particular wine is.
We try our best to be accurate. Usually a winery will have a posted price on their website and that’s our first choice to represent as ‘original retail’. If we can’t find the winery pricing, or in the case of imports where there isn’t a relevant price listing, we’ll consult the reviews which usually list a suggested or ‘full markup’ retail price. We also try to say where we got the price whenever possible if it is the context of an article. If we are making the point that something we are selling is a ‘percent off’ of an original price, we do the research to find an appropriate price comparison that we are comfortable with. Wines come and go, but integrity and trust are long term plays.
Finally we’d like to make the point. Yes we have been doing marketing for a long time. We understand how it works. Back when we started the ‘one price’ system, offering our best price ‘bottle one’ (which was pretty novel three decades ago), it took some consumer education. Many consumers had gotten used to the fact that, under regulated ‘fair trade’ pricing in California (which ended in 1979), they got a discount for buying twelve bottles or more. They would point out that ‘store XYZ’ gave them a 10% discount when they bought a case. After calculating their ‘discount’ at XYZ, our price was still lower. What really matters in the end is what you actually pay, not the real (or imagined) percentage discount you received to get there. Happy Weekend.