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Web Software Is Next Front in Online Rental

8 Apr, 2004 By: Holly J. Wagner

As more video dealers migrate online, they are learning online rental is not quite as easy as it looks.

It may be very difficult to create a user interface that is simple for customers and those operating the business to use, so online rental software is an emerging business opportunity as well as the next video rental battleground.

Online rental pioneer Netflix started it all with its site and patented its model, although so far the company has not sought to use the patent to challenge any of its online competitors. Blockbuster Video is developing its own online rental system for launch later this year. Canadian chain VHQ expects to complete its purchase of an unnamed online software provider this week.

Even small entrepreneurs like Joe Agliozzo, who founded action sports rental site Coreflix.com with a partner, had to develop their own software.

“It‘s like any other business where you have to tightly control your inventory and know where all your stuff is,” he said. “The first day we shipped DVDs, we had to do all the entries to our database manually and cross-check it. About a week in, we decided to develop the automation.”

The software they developed eliminated a lot of manual labor and introduced scanning to streamline inventory tracking.

“We saw that it was a very efficient design. It gathered a lot of data. It reduced the effort required,” said George Lovato Jr., chairman and CEO of Americana Publishing. The company, which publishes audio books and provides them primarily to 7,500 overland truckers, is buying Coreflix.

“We thought it would make a nice platform for us to expand the type of videos offered,” Lovato said. “We looked at three other companies. We were markedly unimpressed. Coreflix's operation was automated with a bar code scan.”

The system will also let Americana do valuable datamining to track customer trends and behavior.

“It wasn't written by a bunch of propellerheads sitting around talking about code,” Agliozzo said. “You build software that is really useful and runs a real business by going out and grinding it out every day.”

Others, like RentShark, have sprung up to offer computer programs and support services for online rental. The company developed the software about a year ago and spent nine months operating its own online rental site to make sure there were no bugs when the company offered the suite to others. The company has been in business about two months and has about 10 clients, according to Walter Kaon, VP of marketing. “They are entrepreneurs setting up virtual video stores and there are brick-and-mortar stores that want to have an online business,” he said.

None of the RentShark users have their online rentals running yet, Kaon said, since it takes a couple of weeks for them to put their information into the system.

“It's an ASP [application service provider] model where a customer comes in and buys a complete package including hosting. We host the solution for them. They load their storefront with whatever they want to,” Kaon said. Clients pay $499 a month, with a minimum six-month commitment, for RentShark to create and host each client's proprietary Web site. Retailers take care of stocking and fulfillment themselves.

Other companies, including Video Vision and Platform Labs, did not return calls by press time. Video Vision's Web site says that software is an add-on to its POS suite.

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