So, we’re all a bit scared by the numbers at the pump right? It’s a logical question in this space, about how the rising cost of gasoline will effect wine club shipping costs.
Here’s the good news: it won’t, for now.
Here’s the bad news: it will, for quite some time after the current illegal and ridiculous Russian war against Ukraine is over.
Why? As I’ve talked about before in this space, wine clubs are required to have their wine delivered by common carriers. A common carrier are the big national brands you recognize like UPS and Fedex, as well as, some smaller regional players like GSO (Golden State Overnight). The good news for wine club shipping costs is that rates are set at the end of the calendar year, for the next calendar year. Every year around the east coast shipping deadline, I’d get an email from UPS and Fedex announcing the new calendar year rates, they were ALWAYS up 10% or so. In times of economic crisis, like gas prices now, they would slop on an additional fee for a gas surcharge. You can see the issue right? Even if the current war ends over the course of the next month (hopefully) the likelihood of the common carriers adding a shipping surcharge to make up what they lost this year due to rising gas prices is almost assured. Plus, that additional cost is going to be passed on to wine clubs through ALL of next year.
So what will wine clubs do with that increased shipping costs? They’ve got a few options. First and easiest, pass it along to consumers. This has been made less popular though because of Amazon’s free Prime shipping. So they can simply have less profits, not likely right? They could cut costs elsewhere, like wine quality. Lastly, to keep profits the same while keeping wine quality the same, online wine clubs can sell you more wine. Shipping costs per bottle go down as shipment sizes increases, so pushing more consumers to buy by the case instead of the standard 2 bottle wine club shipment is, IMO, the most likely scenario here.
Either way, increasing shipping costs is going to be passed along to consumers one way or the other.