Online video store fast forwards

Imagine having a video shop nearby with 50,000 titles in stock. It'll track down the videos you want to buy and deliver direct to your home at no extra charge.

That, more or less, is the service on offer from an upstart and fast-growing online video store in Belfast (www.blackstar.co.uk). Except, of course, its marketplace is not the greater Belfast area, but ranges far afield from its street address at Ravenhill Road, taking in Australia, America, New Zealand, Asia, Africa, all of Europe, and just about anywhere else in between.

Black Star Video, which launched in March 1998 bills itself as "the UK's biggest video store" and claims to have customers in 76 countries and a British customer base of 20,000 registered users. This accounts for about half its total customer base. Another 18 per cent or so are in North America, 25 per cent in Europe and 10 per cent elsewhere.

With the average high-street video shop carrying 2,000 to 3,000 titles, it's not hard to see where online video retailers find an audience. Add free postage to anywhere in the world - a feature few online stores offer - and Black Star becomes a very attractive source for videos indeed, says co-founder Mr Jeremy Glover, one of the firm's three co-founders who serves as marketing and publicity contact. On the other hand, the Black Star website lists Mr Glover's job title as "creator", while co-founders Tony Bowden and Darryl Collins go, respectively, by "destroyer" and "preserver". It may sound a bit like Zen and the Art of Video Selling but actually, the quirkiness is part of what sets Black Star apart from online conglomerates like Virgin.com. For example, all 20 employees get a Web page on which they can give their own mini-biography and each then lists his or her 10 favourite films (Mr Glover's include LA Confidential, Pulp Fiction, Diva, Hear My Song, and The Graduate). Mr Bowden eschews any personal information for a snippet of anonymous verse.

"We put that human touch in because at the end of the day, you buy from humans, not from a computer," says Mr Glover.

Nonetheless, the data-crunching power of computers gives Black Star the kind of edge on bricks-and-mortar stores that keep customers coming back. Some regular buyers pick up several videos a week and have spent more than £1,500 (€2,233.80), he says.

For example, video buyers can search not just by title but by director, actor, distributor, catalogue number, genre, price, or language. And although one of the co-founders has a background in film - Mr Collins has directed many television adverts and produced the award-winning film Korea - Black Star could just as easily be an online bookstore or music store or even, admits Mr Glover a bit sheepishly, an online wedding services site.

The three, with combined backgrounds in marketing, film, and technology, had already decided in 1997 that the Web was the place to start a new business.

Video won out for a range of reasons - besides Mr Collins' background. First, the company needed to be able to finance itself as it was built, so an online retail site fitted the bill. In addition, extensive British databases on films and video already existed, so Black Star could get plenty of ready-made content for the site, everything from the cover shot of the video to reviewers' comments and list prices. "With music and books, those databases don't exist in the UK," notes Mr Glover. And, he says, "to a large extent, videos are presold" - customers come to the site knowing what they want.

However, if they know what they want - and most come for the massive back catalogue or for more obscure films, not current hit releases like Titanic, which Black Star offers for £9.99 - buyers then tend to browse and pick up another title or two on a visit. The average purchase is £30, says Mr Glover, or about 2 1/2 videos. The special Titanic offer has helped the company draw new customers, it has nearly doubled its registered customer base, and has also got some industry notice. "It was a loss leader at £9.99, but over 50 per cent who bought it got something else as well, and 70 per cent came back for additional purchases," he says.

In addition, after they put the title on sale the marketing director of Titanic's distribution company contacted them, asking who Black Star was and what it did. Apparently, says Mr Glover, he'd been besieged by calls from other traditional video retailers demanding to know if the company had cut a special distribution deal with Black Star.

"Certainly, traditional high street retailers are waking up to the threat that online retailers are going to present," says Mr Glover.

But if Black Star offers free postage worldwide - and that's for airmail - and also offers regular discounts on titles, doesn't that make its profit margins painfully tight? "It was squeezing us a lot harder at the beginning," he admits. "But it was a decision we made based on customer desires."

He notes that the typical shopping experience for an online customer goes pear-shaped at the point the purchase cost is totalled and postage and handling has to be calculated. "They've gone through the buying process and suddenly they're hit with all these extra charges," he says. "Now you've totally misled a customer."

He figures they lose 13 to 15 per cent of the cost of a sale by paying for the postage but says the effect of doing so has been enormous, generating repeat customers from all over the world for whom Black Star becomes a cheaper source of videos than the neighbourhood shop.

While growth initially ran at a very healthy 40 per cent a month, it has settled into a comfortable 25 per cent month-on-month. Mr Glover realises he is sitting on a company which will likely prove attractive as an acquisition as the European Internet market develops. "I have no doubt the offers will come," he says. But for now he is more interested in running and building the company.