Thanks for the great post! I know what I’ll be looking for next time I do my wine shopping.
I would hate to go too far into MKT territory, but your post made me think of the conundrum that Château Margaux faced with the introduction of their third wine. Their circumstances are obviously different from Napa producers—even premium ones—but I am curious: do you think there is a risk to Cameron Hughes that its suppliers might find creative ways to offload their excess inventory in other ways? Might they introduce a wholly distinct brand, or rebrand the excess product as a downmarket line from the main one? Perhaps they could reformulate/reblend the product slightly to prevent criticism that they are simply repackaging existing products.
Such a strategy would obviously be risky for producers and would have to generate returns in excess of what Cameron Hughes (a firm with an operational model built around repackaging) pays. But as an unsophisticated wine consumer, I could foresee myself reaching for a rebranded but somewhat familiar brand, while being wholly unaware of the valuable Cameron Hughes bottles sitting elsewhere on the shelf.
Thanks for the great post! As usual, I don’t feel like I’m fully informed in TOM until I hear what you have to say (see also: IDEO).
I thought your analysis of the tension between intent-driven advertising and more general content and brand advertising was spot-on. I would be curious to know how you think Facebook might better position itself to attract more of the latter. It seem that they already do a few things in that regard—e.g., I would suggest that much of the advertising around attracting likes to Pages falls under that category. Facebook’s recent push into video, though beset somewhat by IP concerns and dodgy metrics, seems to offer a natural opportunity for new ad experiences as well.
I am also curious to know what Facebook will learn from the recent widespread rollout of Instagram ads. Everything I’ve read suggests that they have shown high CTRs and maintain robust CPMs. Though the platforms are different, there may be ways for Facebook to leverage both platforms to drive advertiser adoption.
Thanks for the great post, Corey. Word around campus is that our classmates have really enjoyed making use of Drizly—strictly for virtuous and respectable purposes, of course.
Given your take on the the competition, I was curious to know what you think about Amazon’s entry into Manhattan’s alcohol-delivery market, which came just a couple of days after your post, complete with a one-hour delivery guarantee:
They’re still a bit mum on the details, but they seem to have abandoned the own-license model that they pursued in Seattle in favor of contracting with licensed merchants and delivery providers, much like Drizly. Do you think they can pull off a “hybrid” model that conforms to local regulations and captures as much value as possible depending on local laws? Or is Drizly’s complementary model most likely to succeed over the long-term?
I would suggest that Amazon (and its offering, Prime Now) has two promising advantages in a space like this: a massive customer base and an aggregation of more than just liquor retailers. If Prime Now takes hold as a one-stop destination for any on-demand delivery purchase—either from Amazon itself or its retail partners—niche competitors like Drizly may simply not get a second look from consumers. Sure, people might comparison shop, but how many will expect Amazon to lose on price or selection?
I also wouldn’t count Amazon’s “traditional” retail model out too quickly. As I understand it, they have built a number of specialized distribution centers for Fresh, their next-/same-day grocery delivery service. Alcohol would be an obvious complement to the goods that they already offer. And though the regulatory environment favors politically-powerful incumbents, Amazon does have a carrot of “job creation” (i.e., building and staffing new distribution centers) that it might try to offer politicians to change laws enough to ease Amazon’s entry.