Shannon McGee directs the Central Coast Business Development for Pack n’ Ship Direct, a third-party logistics provider for the wine industry. The company works as the liaison between the end customer, the winery and the carrier to ensure packages get delivered successfully. Pack n’ Ship Direct’s four Central Coast locations ship over 100,000 packages per month.
Why would a winery need to outsource to a pack and ship service?
90% of the wine industry is made up of small producers. In these small wineries there typically isn’t space available for storing and packing or the labor force required to pack and ship the wine out.
We’ve found that a small winery with their own wine club membership gets to a sweet spot, typically around 1,000 members, where they find it cost-prohibitive to fulfill the club shipments themselves.
The biggest factor most people don’t think about when shipping to wine club members and other large shipments is the fallout afterwards; tracking the shipments to make sure they all got delivered. A multitude of things can happen to a shipment because it’s a different type of handling. It requires people be home to accept the delivery and for an adult over age 21 to sign for the shipment. Also, because temperatures will affect the package, it needs to be delivered in a timely fashion. We want to be sure it’s not sitting in a truck somewhere. So there has to be someone paying attention to that package and monitoring its progress. Most wineries simply don’t have the staff or the time.
Is using a pack and ship service cost-effective?
The best way to determine if it’s cost effective is to do a cost-benefit analysis. Consider the labor needed for packaging, shipping and tracking, and your carrier costs. Also, if you’re using your tasting room staff for fulfillment and follow-up, then you’re diverting the focus of your sales people from getting more product out to dealing with product that’s already been sold.
Because of our carrier relationships and because of how much we ship, we’ve been able to negotiate very favorable rates. Our rates are structured so that they’re all in one based on bottle, zone and carrier method. This rate includes:
• packing the wine
• the packing materials
• labeling the box
• the shipper’s carrier fee
• the adult signature fee
• any surcharges from the carrier
• tracking the delivery
Does a winery need to obtain licensing to ship product out of state if using a pack and ship service?
Yes, the onus is on the producer to hold the requisite licensing to ship out of state.
There are currently 39 states that allow direct shipments of wine. A winery needs to obtain individual licensing with each state and file timely reports that declare sales and use taxes for that state, county and sometimes city, depending on the individual state’s requirements.
The winery also has to report how much it ships to each person in each state because there are limits. For example, in Virginia you can only ship four cases a year and only two cases within six months to the same customer.
These reports are then submitted to the compliance, which can be a full-time job for a small winery.
Does the pack and ship service provide reporting information?
Pack n’ Ship Direct provides our customers with access to a 24/7, online reporting system. Through this system our clients can look anytime to check their inventory status and view their state shipping reports. They can run and print all their own reports or we can do that for them.
How can a winery ensure they’re in compliance when using a pack and ship service?
We ship wherever a client tells us to; we don’t check compliance, that’s not our job. However, we do have integration with compliance tools that wineries can use on their side. When they push an order through, it gets checked with the compliance system before it comes into our system. The software is set up to alert as to whether or not they are in compliance.
Can a winery ship to states that don’t allow direct shipments?
If a winery wants to ship to any of the remaining states that don’t allow direct shipments, they can go through a three-tier system that involves a distributor and a retailer. For example, if you have a client in Tennessee who would like to purchase your wine, you would arrange with a distributor to deliver your wine to a retailer near your customer.
It’s basically a work-around to get your wine directly to the customer. That’s one of the other services that we offer. We have relationships with distributors that work within the three-tier system. However, this is a non-starter for small wineries with less than 10,000 cases. They simply don’t have the margins to have a distributor.
What additional services does Pack n’ Ship Direct offer?
Our company provides out of the box services including: special packaging for gifts, waxing and label application and removal. We also offer complimentary wine shipping pick-up.
There are no minimums on shipping and no fees for software access.