Wine wars: Lot18 gets new funds as Gilt debuts wine site

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Lot18 has secured a small investment from some big-name backers, just as its competition is heating up. The New York City-based daily deals site focused on high-end wine and complementary foods announced Wednesday it has received funding from Quidsi founders Marc Lore and Vinit Bharara.

The fresh funding comes just as Lot18’s competition is growing significantly. On Monday, discount luxury e-commerce site launched Gilt Wine, a new segment of its food-focused Gilt Taste site that sells a well curated selection of high-end wines.

Quidsi, the company best known for, was acquired by Amazon (s AMZN) for $545 million in November 2010. We’re told that Lore and Bharara’s investment in Lot18 totaled less than $1 million, and is classified as an interim round held specifically to bring in strategic private investors. Lot18 has raised more than $13 million in venture funding to date.

In an interview earlier this summer, Lot18 Co-Founder and President Philip James told me he was aware that players like Gilt were eyeing the wine space, but said he was quite confident his company was positioned well ahead of any potential competitors due to its technology and industry know-how. As I wrote then:

Selling wine online is challenging, in large part because of the complex regulatory issues that come into play when selling and transporting alcoholic beverages across state wines. Lot18 has built a software backend that checks and catalogs various compliance issues in real time for each winery with which it works, James said. Lot18 is not a licensed retailer of alcohol, and it does not hold any inventory. James told me that underneath the hood, the site functions as an eBay-like marketplace between wineries and individual consumers.

The wine buying market is hugely underserved online (no pun intended), but it’s such a lucrative space that in the current web gold rush it could not stay unaddressed for long. Lot18 has a leg up on competitors by being one of the most serious and well-built first movers in the space, but it will clearly have to work hard to keep its edge as the market fills up.

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I have enjoyed the offering and experience Lot18 has provided for wines. Although I have found the culinary offerings very high priced and not items I have been willing to stretch my dollar for. Do your research and check on the wine prices as well. Some have been best prices I have seen on the web, while others are not much better than brick and mortar. Here is a referal invite link if you need it.

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