Entertainment media companies who profitably wholesaled DVDs and CDs during better times – but are NOT in the Big Box Retailer supply pipeline – can adapt to shrinking prices and sales in the current consumer buying slowdown.
Here are tips to survive and, possibly, thrive in today’s media supplier environment from the vice-president of both marketing and purchasing for Spinning Disc Entertainment. See how Spinning Disc launched dropshipping, new product lines and took a second look at Bargain Buy DVDs to change with changing demands.
–Top Ten Wholesale Newsroom Editor
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How The Economy Has Affected The Media Industry
By Eric, VP Marketing/Purchasing
Spinning Disc Entertainment
Source for Movies, Music & More
The economic downturn has affected people all over the country, not to mention the world. Not surprising, lower consumer spending has certainly had an impact on the media industry.
While major electronics retailers like Best Buy have the resources to weather an economic downturn, many wholesalers of media-related products have only two options: (1) Try to hang on and “tough it out” until things get better; or (2) Change with the changing economy.
On the flip side, we saw decline of the Budget DVD market because so many manufacturers were competing for the same pool of customers. Then, prices dropped lower and lower; movie titles we used to move by the hundreds became non-movers in our inventory. Many media suppliers faced the same dilemma – An inventory of great movies at cheap prices in which no one was interested.
Avoiding The Zero-Margin Trap. People ask why Spinning Disc doesn’t carry new releases, movies and music that just hit the market. What new media wholesalers and retailers don’t realize is that New Releases are not money-makers: You cannot make a profit on products that cost you $11 per title that you cannot sell for more than $12. (And, no, you can’t buy hot new releases wholesale for only $5 per title.) Only a major media company can survive on such a thin profit margin. It’s best to avoid this profit-shaved trap and, instead, steer your customers in a different direction.
Return of Budget-Priced Media. Other changes that arrived with economic slowdown were a tightening of the order pipeline, as orders came in more slowly, and a build-up in inventory as sales slowed down. Rising costs, changing customer demands, declining consumer spending pushed many media wholesalers and manufacturers to the curb. And, then …
We noticed that those budget-priced DVDs and CDs that didn’t interest buyers two years ago have become desirable once again … due to low cost.
Stake Out Proactive Positions. Stocking budget products during rough times is a start on surviving; but you can’t stop there. Not to belabor the obvious, but when unemployment approaches double digits and buying entertainment is not at the top of peoples’ To Buy lists, that pullback “trickles up” from retailer to wholesale supplier.
Proactive actions during these times:
· Call every one of your buyers, retail customers and offer them deals and discounts.
· Stay in email contact with customers, during uptimes and downtimes, so that your company is top-of-mind when they do need to order media.
· Never stop promoting or marketing your wholesale media business and customer services – You’re letting people know, “Hey, we’re still here and we’re not giving up. So don’t give up on us.”
More formally, that’s called “Maintaining the Brand and Reputation.” Companies that go quiet and hunker down during bad times are not top-of-mind when things start looking better. Former customers assume they haven’t heard from you because you didn’t survive.
It’s all about using all your resources. An old saying in the media business is: It’s not what you know; it’s who you know. With more than 40 years experience in the entertainment media business, we at Spinning Disc know the value of making — and keeping — great contacts. We proactively used our contacts to learn what new products we should try out in our inventory.
Offer Dropshipping. The dropship program we developed for our retail web site has been a big hit. By offering to dropship new DVD and CD products, and by demanding no investment from our customers, direct delivery to retail customers keeps our buyers interested in doing business with us.
New and Related Product Lines. Recently, Spinning Disc has added Books and Bumper Stickers; Classics & Collectible DVD sets; Car Magnets. We’re even working on T-Shirts. We believe that if we combine these products with our current offerings, we could make up for some of what has been lost since the downturn started.
The media wholesaling business is neither dead nor dying. It is changing; and if you change with it and adapt to new demands, then your media business will make it, too.
