Sunday, December 2, 2018

Should You Sign Up For A Wine Club?

Image result for naked wines
Should you sign up for a wine club?  One way to tell is to apply our basic principles to the deal.

My neighbor recently moved and she had recently signed up for a wine club.  She said the mover would not pack liquids, and she had a case of wine she wanted us to have.  Well, we drank that case on the way to Alaska this summer, and the wine was very good, we thought, particularly for the price (free).   But I was intrigued to sign up and see what the club is all about.

I also thought it would be an interesting experiment for my Living Stingy blog.

There are a lot of postings about wine clubs - and the club in question - online.  And a lot of these are four or five-star reviews on bogus-sounding "consumer reviews" websites of one sort or another.  These sound like put-up jobs designed to calm down nervous people like myself.  They only serve to heighten my sense of anxiety.   This "gut reaction" is something I have learned to listen to, as I get older.  Usually when I disregard it, I end up in trouble.

One reviewer notes that many of these clubs - and there are many of them - sell wines that are exclusive to the club.  The club goes to a winery and has a wine made exclusively for them, with a custom label.  Thus, when they say the wine "normally retails" for $27.95 the price is just a placeholder - as indeed, all "suggested retail prices" actually are.  So a "discount" to $17.50 seems like quite a bargain, unless of course, you are paying for an $11 bottle of wine.  And since these are bespoke wines, you have no way of knowing, unless you are a wine connoisseur and even then, only after you've tasted the wine.  And even then, it is a subjective opinion.

The other day, I was reading the news, and saw an article about an online lingerie club.  Apparently, they were signing up members using negative option techniques to charge them $40 a month for "store credit" unless they unchecked a teeny, tiny little check box at checkout.   Many were chagrined to find charges on their credit card bill that could only be redeemed for more lingerie.   The FTC sued them and won.

When the customers tried to call to cancel, they were put on hold for hours - often on purpose.  If they did cancel, they lost their balance of "store credit" - and so on and so forth.  All the painful and stupid "negative option" techniques that were pioneered by AoL back in the day when they were floundering.

I try to NEVER sign up for negative option services, particularly when I cannot cancel these services easily.  When a vendor requires you to call during business hours to cancel, you know there is trouble.  When cancellation process is not easy to find on their website, you know you are in trouble.  When it is not made explicitly clear that you are going to be charged, there is going to be trouble.

There is no reason that ANY subscription service cannot be cancelled by a click of a mouse.  Amazon can do it with PRIME - so can anyone else.  Requiring people to call to cancel only serves to make it harder to cancel and to use this as an opportunity for "customer retention" either by cajoling them to stay members or by putting them on hold and wearing them down.

I was ready to click on a wine club site tonight and order some wines, but I saw something about $40 a month being charged to my credit card.  I thought it was odd that they chose that number - the same amount the lingerie people decided to use.  Very odd.  Nothing happens by coincidence.

What's more, it wasn't clear whether this was optional or not.  Some other review sites cautioned that it was possible to sign up for this "subscription" by accident "if you are not careful."  Why should I have to be "careful" with a vendor I am supposed to trust?   It is not like we are armed combatants - even if the marketplace is a battlefield.   Yes, we should haggle over prices and fight for every advantage.  But no, we should not outright deceive each other - there are laws about this (as the FTC has shown).

Another section of their site said this $40 a month could be applied to buy wines "from your State".  I live in Georgia, and trust me, I do not want to buy wines from here - they are mostly sickly sweet muscatel and moscatos.  Ugh.

I could not find any clear explanation of how this works.  I reviewed their sited and could not find:
1.  Any part of their site (and I reviewed the entire site, including the "fine print" part, and did not find this) that explains how this $40 a month deal works and whether I am automatically charged for this or have to opt-in or opt-out.
2.  Any part of their site that clearly states how to cancel this membership if I decide to do so.
3.  What they meant by buying wine from "my State" - can I not buy wines from places that know how to make wines?  I would think people in Kansas would be bitterly disappointed as well.
I have a number of mantras on my blog that I use to keep myself out of trouble.  Two of them are:
"The more complicated someone can make a financial transaction, the easier it is to rip off the customer."
"Any business relationship entered into predicated on a lie, no matter how trivial that lie is, will go downhill from there."
In this instance, it seems to me this $40-a-month deal is very opaque and unnecessarily complicated.  I can only assume this means it is not good for me.  It is taking the most simple of transactions - handing cash to a wine merchant and receiving a bottle of wine - and making it complex by a level of at least two or three.   Not only am I signing up for a pig-in-a-poke, but I am possibly signing up for a subscription service - but it is not clearly stated, only implied on their website.

Also, the lack of information on their website amounts to a lie by omission - a trivial lie, but one that portends what is to come. 

And what is to come, I sadly think, is hours of angry phone calls trying to cancel a negative option plan, resulting in my having to cancel my credit card to get out from under it.   If they are poor in communicating when trying to get you to sign up, do you think it will get better down the road?

Sort of takes the buzz out of drinking wine, don't it?

Why do business this way?   I liked the wine.  I don't like their business model.

Oh, right.  money.   A lot of it to be made in these negative option deals.

Knowing when to walk away is important - and hard to do.  We all want to score a "bargain" and want that delicious wine!   But it is smarter, I think, to possibly walk away from a good deal now and again, rather than try to score every single "deal" and get burned by a number of them.  Overall, from a quantum point of view, you come out behind.

We saw this when looking at trucks.  No discount was offered to us so long as we sat in the car showroom.  It was only when we left that we got an e-mail days later, telling us that the "bottom line price" offered to us face-to-face, suddenly dropped by more than $1000.   A little more haggling and it dropped even further.   If we hadn't walked away, we would have paid more.

But other deals, they are only worth walking away from and never going back, because you can't fix some deals to your terms.  The con-artist isn't going to suddenly turn honest.  The negative option peddler (the same guy) isn't going to make an exception for you because you are astute.

When I Googled for the image above, it returned page after page of "wine club" images.   Apparently there are a lot of these clubs out there.  I don't know if all of them use negative option or not.  The fact that one of them uses Groupon to promote its sales, tells me a whole lot as well.

But if you think about it, why would wine be cheaper by joining a club?   There really are no savings to the producer or the middleman by having people sign up.   So the savings would likely be illusory anyway.  The only way they make money, it seems to me, is through negative option.  Just like the lingerie people.

I wrote to the club and asked for an explanation of their policies.  I will post their response.  I doubt they will send one.

* * *

The wine club people did not respond to my email but did call me back. I also did some more research online and look at some other review sites and discussion groups to find out more about their business model.

Their argument is the $40 a month you have automatically debited to your card is basically an investment, sort of like one of these crowdfunding deals. They claim this money is going to help small wineries produce wine and thus you are investing in up-and-coming wineries. But it wasn't clear to me that this money is actually going to the wineries ahead of time in the form of an investment, but would rather just being used to purchase wine. In other words, they couch this in terms of an investment in up and coming wineries, but in reality it's just a spending account that you can use to buy their wines at their prices.

In other words, you don't end up owning a share in the winery. But then again crowdfunding works the same way which is why it's idiotic. The idea of sending your money off for someone to help him start a business and then possibly getting a product in return is utter foolishness to the highest level. But people engage in utter foolishness a lot these days.

The lady on the phone explained to me that by using a discount coupon offer and by selecting a pre-selected case of wine I was automatically signed up for this $40 a month deal. However I could find no place on the website that mentioned that selecting this particular case automatically signed me up or that there was any way of not signing up.  Also the coupon was not a printed coupon but really an offer via email and I saw nothing accompanying the offer saying that I was being automatically signed up or that I could opt out.

They do play a game where they place you on a "waiting list" for the investment aspect and thus you have an opportunity within a few weeks of signing up to opt back out again. Also I noticed a lot of complaint sites such as the Better Business Bureau had a large number of complaints about this club, but that the club did resolve each complaint and refunded people's money. So they are at least willing to give you your money back if you're willing to complain. But you shouldn't have to complain to get your money back, and they really shouldn't be taking your money in the first place.

It is possible to sign up and get the wine without signing up for the $40 a month deal. But then again you don't get the discounted price on the wine you have to pay the full retail price, which runs about $20 a bottle, which is no particular bargain.

But I think that's how the deal works. They want you to sign up for this thing and put $40 a month into this account. Thus you feel obligated to spend the money in your account and then you go out and buy another case of wine at the full retail price, which is where they make their money.

Again this fails the Living Stingy tests on two grounds. First, it unnecessarily complicates a very simple financial transaction - buying wine. I go to let my local wine retailer and they sell me a bottle of wine I hand them cash.  The wine club scenario complicates is by a factor of two or three and also obligates you to continue buying from them. And that's the whole goal of the system - to get you to stop thinking about prices and to lock you in to them as a sole supplier. Neither of these are good for the consumer in the long run.

The second thing is that it's unclear how the system works and thus they obfuscate their business model. Again, I went online to a number discussion groups and saw question after question as to how this $40 a month thing works and also how to opt out of it. I'm not the only one to be confused by their business model and this clearly is by intent. I mentioned to the lady on the phone that I'd be willing to do business with them if they would clearly indicate on their website how it worked. But they've been in business almost a decade and they haven't really changed their website very much so I think they prefer to keep things a little cloudy to say the least.

Is this a deception? Well maybe it's a trivial thing but it's still there. And when you enter into a business relationship based on any kind of deception even if it is a lie by omission, you can expect things to go downhill from there.

Maybe this wine club thing started off as a straight deal where they found wines with small wineries and then sold them to customers.  But maybe somewhere along the line the business was sold or a new sharp-edged guy came in to run things and figured this negative option thing was more profitable.

The bottom line is, if you are a Vintner, you should have no trouble selling your wines. You don't need to sell them through a wine club. And if you are wine consumer, you can find wine just about anywhere these days. We are awash in a sea of inexpensive wine these days from not only the United States, but Australia, New Zealand, Chile, Argentina, and even France.

If you are having a hard time finding wine to drink, you're not trying very hard.