E-Commerce Success Story: Reel.com

Q What is Reel.com, and what do you sell on the site? A Reel.com is a premier online destination for film-related content and commerce. Q What is Reel.com, and what do you sell on the site? A Reel.com is a premier online destination for film-related content and commerce.

Through our Web site, we provide consumers with an intuitive, entertaining environment in which they can access a wide variety of film-related information — such as news, film reviews, trivia, interviews, film clips and editorial recommendations — and we’re also a great place to buy movies.

Q How did you get started selling over the Internet? A Reel.com was founded in September 1996 by Stuart Skorman, the former owner of Empire Video Superstores. Stuart sold his chain to Blockbuster Video in 1994 and launched the Reel.com Web site in January 1997. The site was launched as an online movie information site. A matching service and commerce features were added soon after.

Reel.com was acquired by Hollywood Entertainment Corp. (Nasdaq: HLYW) in Q4 1998. Since the acquisition, Reel.com has quickly grown to be a leading online retailer while simultaneously building a large cache of proprietary movie content.

Q Aside from your Web site, how else do you sell your products? A Reel.com is a Web-based retailer of DVDs and VHS movies, and an online provider of original movie content. Reel.com’s parent company, owner of 1,465 Hollywood Video stores nationwide, focuses on the movie rental business.

Q What is Reel.com’s target market? A Reel.com’s audience is made up of film consumers and enthusiasts. Our original editorial content, coupled with our extensive selection of movies, provides a source of film exploration and acquisition that encourages movie lovers to come back to Reel.com regularly.

Q How much traffic are you seeing to your site? A We have experienced significant momentum in our customer traffic since our launch. According to Media Metrix, the number of unique visitors to our Web site increased from 848,000 in January 1999 to approximately 1.4 million in September 1999. The monthly traffic pattern is influenced by many factors, including the movie release calendar, special promotions, and holiday gift giving.

Q What do you feel has helped make your site successful? A An important part of Reel.com’s success is due to the valuable tools we provide movie lovers to help them as they decide which movies they’ll enjoy watching, renting, or buying. These tools are created by our staff of more than 40 editors who are movie experts and specialists in particular movie genres. These editors analyze movies in Reel.com’s inventory, write 30-word “Reel Snapshots” explaining what kind of moviegoer will like the film and why, create a “Movie at a Glance” ratings profile, and “Movie Matches” that match up similar movies.

Our editorial staff also writes daily news, film reviews, trivia, interviews, film clips and editorial recommendations. For example, the “In Theaters” section is updated every Friday with reviews of movies playing at the local theater.

Q What have you done on a regular basis to promote your site? A Reel.com’s marketing and business development teams implement a broad range of programs to build brand awareness, attract new customers, maximize repeat purchases, and build strong customer loyalty.

Reel.com’s traditional offline advertising is designed to acquire new customers. Our strategic corporate and consumer public relations programs support brand-building and traffic building efforts. Online traffic is also driven by our banners and content placements, which are often through our strategic partners. Reel.com’s Producers Program has been an excellent customer acquisition and retention tool. Our bi-weekly e-mail newsletter keeps customers coming back.

Plus, our relationship with our parent company, Hollywood Entertainment Corporation, provides us with substantial opportunities for marketing to its tens of millions of members through point-of-sale displays, in-store magazines, and direct mail campaigns.

Q What are some of the downsides or pitfalls that you have experienced? A We’ve experienced some of the challenges often faced by fast growing businesses, such as the ability to attract talented employees fast enough to meet the demands of our fast growth. Reel.com has the competitive benefits of having a great product, a well-financed company, and a great team already in place. Nevertheless, recruiting is always a high priority because we realize that a company’s success depends on the talent of its team.

Q Were you prepared for this degree of commitment, or did you learn as you went along? A Reel.com has always been committed to its customers. For example, early on we implemented a five-point guarantee that ensures the best price, quality, selection, secure transactions, service, privacy, and customer satisfaction. To follow up this commitment, we have continued to expand our warehouse and customer service capabilities on a regular basis to meet the needs of our growing customer base. The bottom line is that Reel.com has and always will be very committed to customer satisfaction.

Q After going online, was there a specific turning point for your business, when sales really began to increase? A An important turning point for Reel.com was in the summer of 1998, when the company offered the Titanic home video at a special pre-order price. The home video release of Titanic was easily the most highly anticipated release of the year and broke records at the box office as well as in home video sales. This promotion drove more than 300,000 new customers to Reel.com and a post-promotion survey of a portion of these customers revealed that while over 75 percent of the Titanic customers had bought products online, a full 60 percent of these customers had not purchased a home video on the Internet previously. Reel.com, therefore, not only increased its customer base substantially, but also significantly expanded the online video category.

Q What type of store software products are you using on your site? A Reel.com uses Microsoft electronic commerce software.

Q What type of payment processing system are you using? A Reel.com uses CyberCash for its payment processing.

Q Where do you see your business one year from now? A We are in a quiet period following the filing of an S1 document for an IPO, so I cannot give forward-looking statements.

Q What advice do you have for beginners who are interested in selling over the Web? A Well, there have been many books written on how to succeed in online retailing, so a short answer will not do justice to the complexity of the subject. However, I can say that Reel.com has been successful because of our expert content, our strong brand, and our ability to execute well.

Visit their site at www.Reel.com

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