Yahoo uncorks wine auction deal

The company announced a deal Tuesday with USWineAuction. As part of the companies' multiyear deal, USWineAuction is listing its entire inventory of collectible vintages on Yahoo's auction site. USWineAuction will also sell wine on consignment for individual Yahoo members.

"In surveying the wine category, we understood it was important to have an expert in that area to grow the business," said Brian Fitzgerald, director of production for Yahoo Auctions. "We found USWineAuction to be the best choice."

Selling alcohol, and specifically wine, has been a tricky business online. Because of regulations that came about as the result of the repeal of Prohibition, many states forbid companies to ship wine directly to individuals and ban individuals from selling wine at all.

Companies such as Wine.com and WineShopper.com tried to work around the regulations to sell wine online. Despite high-profile backing, the rival companies merged and eventually closed shop, selling their assets to a lower-profile competitor.

eBay, the leading online auction site, banned the sale of wine and other alcohol products in 1999, largely out of concern that sellers were having a difficult time complying with the complex regulations. eBay reintroduced wine auctions on its main site last fall and allows wine sales through its Sothebys.com site and within its live auctions.

However, eBay allows wine to be sold only by trusted companies such as New Vine Logistics, and it still bans individuals from selling wine on its site.

Despite the legal ramifications, Yahoo allowed its members to list wine for auction up until this week's deal with USWineAuction. Yahoo now directs customers who want to sell wine to the wine auctioneer.

The legal complexities of selling wine online were not Yahoo's motivation for cutting its deal with USWineAuction, Fitzgerald said. However, "it was certainly something that was interesting to us, partnering with somebody that is licensed" to sell wine, he said. "It's a benefit to everybody buying from the channel."

USWineAuction began listing wine on Yahoo on Monday, said Mike Berube, director of marketing for the wine auctioneer. The company now has about 300 listings and plans to expand that, Berube said.

All of the wine that USWineAuction has listed is on consignment from retailers, wineries and individual collectors, he said. The company will also help other wine sellers to sell on Yahoo. Among its partners is Winetasting Network, which lists wine on eBay and soon will list about 50 wines on Yahoo, Berube said.

USWineAuction decided to team with Yahoo to draw a greater number of bidders to its auctions, Berube said. The company considered partnering with eBay but wanted to be able to allow individuals to sell wine using its services.

"eBay does have a broad base (of buyers). But the high-end stuff resides with individual sellers," Berube said. "The only way to get that is through us."

Yahoo and USWineAuction declined to give the terms of their agreement. USWineAuction will be paying different fees to Yahoo than would a regular Yahoo seller, Fitzgerald said. He declined to give specifics.

Once the leading competitor to eBay, Yahoo's auction site has been struggling since the company introduced fees on the site last year. It has tried to revive the site by tinkering with its fee structure and revamping its entire shopping area, but listings on the site are still a small fraction of eBay's size.

Later this week, Yahoo will close five of its European auction sites and promote eBay's rival sites under a deal the companies announced in May.