INTERNET ACCESS OFFERS NET GAINS IN HOME ENTERTAINMENT

RANDY WEDDINGTON

Supermarkets stand to benefit from video distributors' efforts to tap the Internet pipeline, which is becoming a vital link in supplying home entertainment products and information.

Distributors have designed their Web sites to offer a variety of services for supermarkets and their customers. This includes everything from selling products direct to consumers to offering a broad array of information on merchandising, promotions, new releases and top selling rental and sell-through titles, as well as box-office statistics.

"New technologies got here just in time to help distributors survive," said Kirk Kirkpatrick, vice president, marketing, WaxWorks/VideoWorks, Owensboro, Ky. "Our Web site has had a 600% increase in usage over the last year."

Video distributors are aggressively pursuing the growth opportunity. "The Web is MVC's thrust," said Bob Tollini, senior vice president of marketing, Major Video Concepts, Indianapolis. "We've made a major investment in it, since more and more people are getting involved. The Internet isn't just for young white tech-heads any more."

One new on-line MVC venture offers several tools for supermarkets. "This site will do three things," explained Tollini. "First, it will e-mail new release information each Tuesday to supermarket customers with Web addresses. Second, it will provide information on stars, directors, awards, etc., making it a one-stop reference source. And third, it will sell product directly to consumers."

Video executives have been giving the site high marks. Commented Greg Rediske, president, Video Management Company, Tacoma, Wa.: "We like Major's e-mail program. It's a nice touch, and it gives our supermarket customers a little something extra."

All this is structured so that the supermarket appears to be selling to, and dealing directly with, the consumer," added Tollini of his company's site. "MVC does all the work and gives supermarkets a commission."

One example as to how this works can be viewed on Marsh Supermarkets' Web site (www.marsh.net). On the home page, the video department is featured and linked to MVC's myvideostore.com home page which displays the Marsh Video Center logo on the top instead of myvideostore. Through this site shoppers can order products directly. On VHS orders, there is a get a video rental free offer posted when you bring the online order receipt into the store.

Other distributors have mounted similar operations. "We have developed a fulfillment center for supermarkets," said Bill Bryant, vice president, sales, grocery and drug, Ingram Entertainment, La Vergne, Tenn. "We pack and ship on their behalf, as though the product is being shipped by supermarkets."

WaxWorks/VideoWorks, on the other hand, takes a more visible role, posting only retail prices in its on-line catalog. Consumers can then use it as a buying guide through local retailers. "It has been invaluable to our customers," said Kirkpatrick, "increasing their business with special orders. "Another distinction is the site's detailed order tracking. "We still offer the only Web site where customers can see what's in stock, order product, and then track their shipments."

Still others have become suppliers for Internet firms. Valley Media, Woodland, Calif., for instance, now counts Amazon.com, Buy.com, CDNow, and DVD Express among its customers. Its Internet sales were up 172% for its fiscal 2000 first quarter.

Yet, some voice reservations about both approaches. "We're not trying to be an e-commerce fulfillment center like some distributors," said John Jump, senior vice president of sales, Sight & Sound Distributors, St. Louis. "And we're reticent about making our customers sales agents for direct sales. That's a gray area we don't want to get into." Instead Sight & Sound is finding other ways to be of use to its customers. "We use the Sight & Sound Web site," said Denise Darnell, video supervisor, Southeast Foods, Monroe, La., "to keep us informed about the lease and discount programs that we participate in."

"One helpful service at our Web site is trailer screening," said Jump. "We offer 200 titles each month." In addition to marketing tips and studio links, the site has a flea market section for on-line closeouts. Recent postings include "Big Top PeeWee" for $2.00, "Chitty Chitty Bang Bang" for $4.00, and "101 Dalmations" for $14.00.

As a handy way to dispose of product overstocks, the Web may see more activity. "We're taking a look at doing closeouts on-line," said Bryant, "as well as auctions." The latter has already proven effective for Buena Vista Home Entertainment, Burbank, Calif., which bypassed distributors with direct auctions to retailers from its bvhe.com Web site.

The ultimate impact of the Web remains to be seen, since the territory is still largely uncharted for both wholesalers and retailers. In the meantime some distributors are encouraging supermarkets to follow their lead into cyberspace.

"Many forward thinking supermarket chains are already getting on-line," said Tollini. "The most progressive have Internet efforts encompassing a wide variety of products and services."

"Certain West Coast accounts are already testing the rental side of the business as well," said Bryant.

Most brick-and-mortar operations, however, remain cautious about the technology. "Bashas' has its own Web site," said video specialist Bill Glaseman of his Phoenix-based supermarket chain. "It's possible that we may tie into other Web sites later but right now that's premature."

To overcome this reluctance distributors emphasize key benefits. "Remember that a click away is a huge video Web site," said Tollini, "that adds dramatically to the impact of your own Web site."

For some wholesalers and retailers, at least, this on-line partnership may be the wave of the future. "At present the volume is low, as with all Internet sites, but it's picking up steadily month by month," said Bryant. "And it will be substantial in the near future for supermarkets, since it gives them access to deep catalog not normally stocked in the stores."