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Maybe mobile wine shopping isn't such a lame idea after all

Wine.com is a hangover URL from the dot-com bubble, but that hasn't stopped this company from crushing.

Who the heck wants to shop for wine on their mobile phone? All the pinch zooming, typing "Domaine de la Vougeraie Clos de Vougeot Grand Cru" and then having it autocorrected... ugh.

But today I have been converted. Now I think shopping for wine on your smartphone isn't such a bad idea. In fact, it will help Wine.com, an online wine retailer, close the nine percent of shoppers that log onto its website with their smartphones. Now there's a chance they'll actually make a purchase, thanks to Wine.com's just-launched and fully functional mobile website.

Wine.com's new mobile website. Click to enlarge. Wine.com

"I'm not sure why we've seen a huge increase in iPad and mobile traffic come into our site," says CEO Rich Bergsund, who is not usually clueless, as you will soon learn. "I can make up ideas, like if you're in a restaurant and you've got a great bottle you want to remember to buy or you're shopping for best prices while in a store."

The reason people are wine-shopping with mobile devices don't really matter right now. What does matter is that after Christmas 2010, 20 percent of traffic on Wine.com was coming from iPads. That traffic now accounts for eight percent of Wine.com revenue.

What's more, iPad orders are 50 percent larger than website purchases. People on their computers will spend $150 on six bottles, on average. People shopping with their iPads will spend $225. Perhaps if mobile shoppers are given a better shopping experience, they too will spend more.
Rich Bergsund, CEO of Wine.com Wine.com

"We look for spikes and changes in shopping behavior," says Bergsund, who does his analytics homework more than many CEOs I have spoken with. "Where ever we see disruption we act. We developed an iPad app totally different from Wine.com, and our iPhone app is also a very different shopping experience."

Mobile visitors to Wine.com, who accounted for only four percent of overall site traffic in January 2010, are so far driving 14 percent this month. On the other hand, mobile revenue and "conversion rate"--i.e., the percentage of visitors who actually buy something--have lagged at only one-percent of revenue. Bergsund expects this percentage to change immediately, starting today.

Change has been good for Wine.com. It is a URL that is both embarrassing and enviable. Most anyone who searches for "wine" online will come to this site. In fact, it has sold 2 million bottles of wine in the last year to more than a million registered users (35 percent growth). The embarassing part is the original Wine.com went bankrupt in 2001. That's when a company called eVineyard, founded in 1998, bought the domain.

Bergsund, who joined Wine.com in 2006, says today's Wine.com couldn't be more different than the company that died in the dot-com bubble. Wine is a "harder than average" merchandise category to do online, so to Bergund, it's small wonder that the company's earlier incarnation failed.

There are strict state and federal laws around shipping wine, lots of licenses and shipping agreements to navigate, and then there's the need for warehouses (Wine.com ships to 90 percent of the U.S.). The current Wine.com is benefiting from the increased popularity of online shopping since 2005, new leadership, and today's technology.

"Wine as a category is growing slower than others," says Bergsund, "But it is under-penetrated. Only one percent of U.S. wine is purchased online. Compare that with computers, which are something like 50 percent. We have a long way to go."

Maybe people won't ever shop for wine online they way they do for other goods, but it's a pretty good gamble they will. Wine.com's dedication to analytics and serving its customers new technology will certainly help it tap into new revenue. The number may be small, but hey, it's revenue! Bergsund jokingly calls mobile sales "free revenue" because the company isn't structured to rely on them.

I would like to give a nice, big, slow clap for a company that didn't roll out a mobile app. Mobile sites are completely undervalued. I get that iPad is a different mobile user experience and can really benefit from beautifully done apps, but a well-crafted mobile site is a smartphone user's friend.

"When we looked at iPad stats, traffic and revenue, and compared that with the traffic by browser, we have more people coming to us via web," says Bergsund. "This eliminates that one step of looking for an app and all mobile users, regardless of whether they are on iPhone, Android or other smartphones, have the same ability to shop."

Wine.com is majority owned by Baker Capital and was last funded in 2007. The company turned profitable a few months ago. A month ago Wine.com announced it reached $60 million in revenue over 12 months, growing at 20 to 25 percent rate for the past seven quarters.

"We turned this company around and now we're in a fun stage," says Bergsund.

I raise my glass so that all startup CEOs have the opportunity to say this one day. Cheers!