Geerlings & Wade - Cutting Through the Vines (2,787 words)
"Another difference in our system is that depending on the state, different people are allowed to deliver wine to our customers. In some states, it's UPS, in others we use a courier service and in some states we do it ourselves," says Kober.
In Massachusetts, the law requires each delivery vehicle of alcoholic beverages to have a permit. So UPS or a courier would have to get permits for all of its vehicles in Massachusetts at a cost of $35 per truck to comply—not entirely practical.
Also, says Kober, in some states the reporting requirements of the delivery company—who they delivered to, the recipient's date of birth, identification number, etc.—are too burdensome for standard delivery companies. And of course, the USPS cannot deliver alcohol by law. Geerlings & Wade also has its own fleet of 12 delivery vehicles based in Massachusetts and New Jersey.
In marked contrast to the complex wine-delivery situation, Geerlings & Wade's wine-accessory inventory is stocked in and delivered from Canton, MA, rather than divided among the 16 distribution centers.
Pearce sums up, "Direct marketing is a business of watching pennies in order to make money, so we work hard at reducing our delivery costs. In Texas, for instance, we use multiple couriers to minimize our costs; we do that as well in Massachusetts." For deliveries to western Massachusetts, the company has found that third-party couriers are more economical than the proprietary delivery fleet.
"These savings are passed on to the customer in lower product prices," Pearce says.
Inventory Forecasting is Key
The first question this wine merchant asks its customers is, "Where will you have it shipped?"
The company must find this out so it can select and ship product from the correct facility to avoid violating interstate shipping laws. Once the shipping destination has been identified, all of the specific state rules come to bear on the transaction.