Scotch Whisky: A Changing Market
Old wooden jars are lying in a dusty cellar, waiting to be bottled. From water to whisky takes several years, where the ripening process is an important factor. It takes time to make whisky, so every kind has its own unique taste and story. This information of specific malts and blends makes this industry knowledge dependent, where experts can lead customers to the whiskies they would like to buy. But knowledgeable salesclerks in liquor stores come with a price.
The demand for whisky is growing and the products are becoming increasingly popular over the world. In 2013 the Scotch whisky export rose according to the Scotch Whisky Association (11-04-2014), where the Scotch Single Malt whiskies are gaining market share.
In this relatively conservative business I see increasing competition of e-commerce. This specific market seems a newly vulnerable market. Using the criteria from the article of Granados et al (2008), I will elaborate this presumption.
The demand for whisky is growing and more different customers are attracted to these products, what makes this market attractive to attack. Where the entry-barrier for physical stores is high, the information given in these stores can be copied. Of course, an information base of the products is needed, but there is a vast amount of knowledge already available via distilleries. More customers are used to buying products online or gather information online prior to their physical store visit. Also the cost structure of physical stores is different than e-businesses. This makes this market easy to enter and also difficult to defend.
Where customer service is no longer required to be physical, e-commerce businesses are likely to by-pass the liquor stores and take over their function as customer oriented information provider. Or is this an essential part of the buying experience?
Examples of e-business:
Example of a physical store with online sales channel:
Granados, N., Kauffman, R., & King, B. (2008). How Has Electronic Travel Distribution Been Transformed? A Test of the Theory of Newly Vulnerable Markets. Journal of Management Information Systems , 25 (2), 73-95.