VIDEO BUYERS COULD PROFIT FROM E-COMMERCE SERVICE

RANDY WEDDINGTON

EMERYVILLE, Calif. -- The Internet product brokerage firm MetaExchange.com here launched a new service that may restore some clout to video supermarket specialists frustrated by studio buying programs.

The service, made available on Nov. 16, facilitates the practice of "sideways selling," the studio bugaboo via which retailers make pre-release arrangements to balance their stock orders.

Under the practice, retailers -- who believe that, to achieve the discounted prices of escalated program goals, they have had to buy more copies than can be profitable -- contract to sell their surplus to other retailers who haven't attained goals.

These tapes are typically sold at a discount (near the program cost) on or around street date. At that point goal-buyers can roughly recoup their additional program investment, while non-goal-buyers can realize considerable savings off the wholesale price they would otherwise have had to pay.

Retailers say the practice is a means to offset studio sales pressures, as it addresses what has been a problem for some.

"We try to avoid sideways selling; it's hard to do," said Greg Rediske, president, Video Management Co., Tacoma, Wash.

"The independents that we reach love it because it's supplying a bit [of product] in the face of the studios, and everybody is upset at the studios right now," MetaExchange founder Brent Gorda told SN in a phone interview.

Studios have shown disdain for the practice because it counteracts program goals of maximizing the amount of product in the rental trade. Thus retailers, in order to avoid antagonism, have had to keep low profiles while using it.

Video volume at the site is low but growing fast -- "We may be doubling every day here," said Gorda -- with only a couple of undisclosed supermarkets having signed up so far.

Advertising campaigns are assisting this growth. On a Nov. 27 SN visit to the Videoretailer.com Web site, a banner ad for MetaExchange was prominently displayed.

Although video is a new arena for MetaExchange, the site has operated for some time. "We've been working on the [video] idea for five years," he said. "We've actually only been live with videos for a couple of months, but we've been live with the site for two years."

During that time the site has offered a variety of products, with current selections including gold bullion and airline tickets as well as game decks.

"We're fairly liquid in collectibles," said Gorda. "We recently started PlayStation 2s and those are just going through the roof. It's giving us some visibility out there."

Current PS2 prices at the site are around $500, a factor that can affect deals. "PlayStation 2 buyers start getting cold feet because of the price tag," he said. "Paying over list always gets people upset."

In contrast "very few video transactions have a problem," he said. "Just today somebody didn't realize that 'X-Men' was sell-through and put a price in that was rental. Somebody else jumped in and got them at that price. I had to go in and say, 'Look, guys, this doesn't make sense."'

As this indicates, MetaExchange closely tracks its deals. "I sit here with a monitor that shows every transaction that goes by," said Gorda.

That results in an unusual amount of customer service. "We tend to hold people's hands a little more than, say, eBay might, right off the start," he said. "If there's a pattern there of someone who doesn't know what they're doing, I'll call them up."

This is needed because "the idea is a bit complex," he said. "It's not like a simple auction, and if you haven't traded stocks before, then it takes a bit of time. Anybody who registers, we give them a callback and spend 15 minutes on the phone with them, getting them comfortable. There are practice pits in which they can trade rock, paper, scissors."

Despite the complexities of the process, the site's layout is clear and concise. "We have a good reputation for building Web sites that are high quality," said Gorda.

And the procedures have been thoroughly information superhighway-tested. "In the last couple of years we've done over 200,000 transactions here," he said. "Over $15 million in product has gone through the site."

In addition to sideways selling of new product, MetaExchange also offers a sales medium for used product, the extra tapes that become available in subsequent weeks as rental demand is satisfied.