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I just opened a rental business a few months ago, here is my $0.02:
- You simply can't compete in large cities where Blockbuster and the like can be found. Your best bet is in small rural areas with populations in the 5 digits.
- Unless you plan on buying large amounts of New Releases, distributors will cost you more money (cause you will have to pay for shipping). Just apply for your Sales Tax License, then apply for tax exemption status at Wal-Mart. The only down-side is that you won't get your movies until the release date.
- Personally, I elected to not even enter the VHS market. They are too combersome, you can't tell when they are damaged, they cost more to stock, and they are slowly going the way of the 8-track. Instead, we stock only DVDs and we carry name brand players bought from liquidators at costs 50% below retail. We then mark up the price by $15 and give customers 5 free rentals. Anyone coming into our store asking for VHS gets our sales pitch on DVD. Currently we sell about 4 players per week, which equates to 4 new, loyal, customers (and 8 out of 10 will use all of the free rentals on the spot which then turn out to be late half of the time).
- I wouldn't concern myself with Netflix. Their weakness is they CANNOT compete with impulse buyers and people who want to see a new movie when it first comes out. Their market is the cautious consumer who just wants general entertainment available in their home with less hassle. Yes, they are big and will become bigger...but who want's to wait on a "list" for weeks or months to see Matrix Reloaded when it comes out?
- Last, develop a system for the "shelf life" of your movies. Example: We may stock 6-9 copies of LOR: Twin Towers when it comes out. For the first 6 weeks all rentals will be due back the next day. We will then sell half of the copies. Then for about 6-9 months the rentals will be due back after 3 days. Then we will sell all but 1 copy and the rentals are due back after 5 days.
How much capital (appx) is required to start up a DVD business?
We started with around 400 titles and 450 copies (i.e. 4 copies of Ghost Ship equates to 1 title). You can figure to get older copies from sources such as Half.com and pawn shops for about $9 each, with newer titles fetching $19.99 a piece.
Having said that, here's a breakdown:
POS Software $1000
QuickBooks $170
Computer $275
Monitor $50
Laser Printer $75
Receipt Printer $145
Credit Terminal $100
Cash Drawer $100
Barcode Scanner $70
POS Desk $350-$1000
Roadside Sign $250
Lumber Materials $450 (to build your shelves)
Shrink Wrap Kit $75
TV/DVD $225
DVD Cases @ $0.40 each
Double Disc Insert @ $0.50 each
Drop Box $200-$500
Beverage Cooler $500-$1500
I did some pretty extensive research on getting the lowest prices on this stuff. Actually, some of this stuff I got for dirt cheap on ebay (like the shrink wrapping kit). Most came from ebay, I got lucky on the beverage cooler for $250 used and $250 in repairs.
Also, I have a relative that built our display cases which saved us tons of money. A good carpenter would probably ask for $50-70 per hour.
One last thing they we have tried with success so far:
Your biggest money maker is New Releases, but they are also your biggest cost (excluding payroll). So we implmented a system so that if the customer returns a New Release the next day by noon (instead of by closing), they receive a $0.50 credit on their account. In the end, they get the rentals for less cost, and we get the DVD in the door quicker so that we can rent it again and not have to stock more copies in its place.
Not all customers will take you up on the offer, but it does help.
1) There are many POS systems for traditioal video rental shops. Which do you recommend as the most robust and scalable? Remember my subscribers are paying a monthly fee with a maximum number of VCD or DVD's out at one time.
2) Next I need web application work for the front end and at least part of the back end / database. I have had meetings with tech application companies here and while they are all eager to take on the work and build from scratch (and bill from scratch of course) I am not convinced that that is necessarily. Is there off-the-shelf software already (just as there is POS video rental software already)?
3) Whether your answer to 2 is yes or no, my follow up question is how will the programming run with my POS (answer to 1)? Will it run in addition to, or as a supplement to my POS? Are POS scalable such that I can have the programmers add the front and back end to it?
Any information or guidance you can give here will be much appreciated. And if you are really knowledgable I am also willing to pay you a consulting fee for your expertise.
#1: I would probably recommend none for several reasons. First, and most importantly, the backend database will be proprieatary which means that you will be unsuccesfull in having your web server connect with it in order to share information. Second, THEY ALL HAVE BUGS. I've ran into so many problems with "Rapid Rental" (www.tvl.com) that it makes me sick to my stomache. It would be much better to develop your own in house system so that when a bug is found you can fix it yourself instead of relying on a 3rd party to "get around to it". Lastly, there would be so many features that you would not use (family members under an account, food and beverage sales, etc.) and many other features that would be absent that would be crucial to your business model.
#2: Once an in-house POS is developed, the web frontend is the easy part. It merely connects with your database and assigns customers to movies. Ofcourse the technicalities are more complicated, but this is the bottomline that must be accomplished. Otherwise, how will customers "order" movies? So, yes. It is necessary.
#3: In addition too. Your POS would run on an Intranet, while your website would run on the Internet. But they could both function on the same server (or clusters), with the same database and with similar mechanics.
I will say this though: The most complicated part to a project such as this is planning the database. You must account for all scenarious by providing checks and balances. This was essentially my job for 5 years (analytical database design) with corporations such as AT&T Wireless, ediets.com, and UAB, before I decided to run my own small business. I still love computers and databases, I just got tired of the cubicles. Does the movie "Office Space" ring a bell?
While I'm on the off-topic subject of Rapid Rental (www.rapidrental.com) produced by TVL (www.tvl.com), I would like to suggest to any person considering them for POS to NOT PURCHASE it for several reasons.
#1: I can list ATLEAST a dozen glitches within the system that will affect your day-to-day business.
#2: As a former database consultant, I can list ATLEAST 5 ways in which Rapid Rental is designed improperly which will yet again affect your day-to-day business.
#3: I was told that upgrading to the "new" K2 software would be free and now they request a "nominal fee".
#4: If you are not skilled in computers, tech support will give you run arounds in how the issues you may/will have are not their fault. If you ARE skilled in computers, they will take the defensive stance when you bring these problems to their attention. (On several occasions I had to email them my data with step-by-step instructions in order to prove what I was saying was true).
If anyone is considering purchasing Rapid Rental, again, I suggest you don't. If you would like more info you can reach me at ---- videovillage @nospam@ jivie.com ----
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