April 5, 2011

Amazon Gold: Selling Your DVD Via the Behemoth Online Retailer

So you've finally finished your documentary film and authored a DVD (or a Blu-ray; for the purposes of this article, I will use DVD). Whether or not you have a DVD distributor lined up, it's worth investigating how you can sell DVDs independently, so you can maximize your revenue and/or assess your distributor's terms.

Selling DVDs directly to customers will maximize your profit potential on a per-disc basis, and can be quite lucrative. If you have a business license and a website, it's easy to add a payment button or storefront and, voila! You're in business. Of course, your sales will be primarily limited to people who either know about your project already or find out about it through publicity, advertising or random luck. There are many other distribution channels for DVD sales; depending on the nature of your documentary, you may be able to sell it in catalogues or at retail outlets. 

One option that many filmmakers recognize, but relatively few embrace, is making their DVDs available on Amazon.com. With over 615 million visitors per year and patented "One Click" purchasing, it's hard to ignore the opportunity presented by this behemoth online retailer. I've been successfully selling DVDs on Amazon since 2002, and often recommend it to friends as a sales channel.  So is Amazon an option for you? And if so, which Amazon program is right for you, and how do you go about getting your product listed? Here are some of my insights.

Amazon.com offers several different programs for producers to reach the retail market: Amazon Marketplace, Amazon Advantage and Fulfillment by Amazon. Two other programs can be used in conjunction with any of the other three: Amazon Affiliates and CreateSpace

Let's start with CreateSpace (CS) because it may be the simplest way for filmmakers to achieve their goals. CS is an Amazon subsidiary that manufactures DVDs in DVD-R format. Setting up your project on CS is fairly simple--and best of all, it's free. You simply type information about your project into the system, price it and mail in a master disc. Using industry-standard templates offered by CS, you create artwork for your DVD packaging and disc, and your DVD is assigned a UPC code. Once everything is approved and you've tested a sample disc, your DVD goes "live." It's now sold through Amazon.com, and you'll make a percentage of each sale. 

Income is subject to some fees, but a disc sold for $25 on Amazon's storefront will yield you $9. It's not a terrific margin, but keep in mind: Making DVDs in this fashion means you have no glass-mastering costs and no inventory, and you never have to physically ship a single product. You can also order DVDs directly through CreateSpace for customers, at a cost of $5 plus $3.60 shipping or $8.60 per disc (shipping is discounted for multiple DVD orders, of course). This can be a convenient and highly efficient method of selling your product, and it's inventory-free. 

But there are downsides: (1) the relatively high cost of this service when compared to DVD duplication or replication; (2) you are dealing with DVD-Rs, which can sometimes have compatibility issues; and (3) you don't get any information about who is ordering your product via Amazon, just a statement at the end of the month.

Even if you are offering discs via CreateSpace, you may wish to enroll in Amazon Marketplace (AM). This service allows publishers, re-sellers and the public to offer new and used products on Amazon. For DVDs, there's only one catch: your product needs to already appear on Amazon's website (see below about how to accomplish this). Once it's there, you simply sign up for the AM service, look up your product and click on the "Sell yours here" button. You then enter information about product condition and your sale price. When the DVD sells, Amazon will charge a 15 percent commission and a closing fee, and bill customers for shipping. Going back to our $25 DVD example, Amazon will pay about $20.45 plus a shipping fee. In the scenario where you're purchasing discs and having them mailed via CreateSpace, you can fill a Marketplace order and net a profit of $11.85. If you're having discs copied in bulk and are shipping them yourself, your profits will obviously be substantially higher.

Amazon Marketplace is a retail form of selling, so be prepared to spend time either visiting the post office or the website of your DVD fulfillment service. A more efficient way to do things is to use Amazon Advantage (AA), which functions as a wholesale marketplace, allowing publishers and content producers to distribute their products. To enroll your DVD, you need to have a scan-able UPC barcode (see below for how to do this) as part of your packaging. By following a menu system, you will describe your show, post reviews and a director's biography, and set a retail price. Once your entry is approved, Amazon will order a quantity of your DVDs, warehouse them and then sell them directly to customers. You'll get paid as the inventory is sold--and Amazon will pocket 55 percent per disc, plus $30 per year. In this scheme, the net on a $25 DVD will be $11.25, not including the cost you'll incur bulk-shipping DVDs to Amazon.

Amazon Advantage works well, but there is at least one pitfall: You can't control how many units of product Amazon will keep in stock, and they tend to stock a minimum number. Over the holidays or in the wake of a big event such as a TV airing, your title may suddenly become "out of stock" and unavailable. That can be frustrating, and can result in loss of sales. One way to prevent that from happening is to file a "stock up" request with Amazon before any major event. Another is to enroll in Marketplace and offer your product for sale even while it's available on Advantage. That way, even if Advantage runs out of stock, customers can still purchase your product via Marketplace.

Using Fulfillment by Amazon (FBA) can also eliminate the stock issue. This program is similar to Advantage in that it is wholesale, but with Fulfillment you are the one controlling how much inventory Amazon receives. The fee structure is entirely different. First, you'll pay a rental fee for the space you're taking up in Amazon's warehouse of $.45-$.65 per cubic foot (an 80 Blu-ray box takes up about 1.5 square feet). Second, you'll pay handling, packaging, referral and closing fees. On a typical $25 DVD, these fees add up to roughly $5. FBA makes life simple in that you don't have to store DVDs in your home, office or garage; you can send them to Amazon by the palette, if you want. As with Advantage, Amazon will process, box and ship your products, and you'll get paid once a month for your sales. 

There can be hidden costs with some of these programs, including annual fees and the occasional lost and damaged shipment. One way to offset some of these costs and make additional money is to enroll in the Affiliates program. Affiliates provides a referral fee for each product sold via an embedded link. It's easy to enroll, and once you're set up, you can build Web links and banners for your DVD and related books and other products. Each time a customer makes a purchase as a result of your link, you'll receive cash. For a $25 DVD with a referral fee of 6.49 percent--that's an extra $1.62 in your pocket. 

Just as there may be some hidden costs to selling, there can be unexpected benefits. If you register your DVD as a product far enough in advance of publication (roughly one month but the earlier the better), your product will show up in well-perused list of upcoming releases and can become available for pre-order.  That will heighten awareness and interest in your film, and give you a rough idea of how many discs you're likely to sell in the first few months.  Depending upon your title's popularity, Amazon may also advertise it via e-mail blasts or on third-party websites, and display it on the pages of related products.  You'll also find that reviews (hopefully good ones!) will accrue over time on the Amazon site, and sometimes there will even be discussion links that develop as an outgrowth of your listing.

By the way, there's one additional catch to selling on Amazon, and it's one that throws many people for a loop. As I've mentioned, in order to be listed in the company's database, your product needs to have a scan-able UPC barcode. The Uniform Code Council--the nonprofit organization that provides UPC codes for industry--was created primarily to service medium-to-large businesses. As a result, they charge an application fee and annual fees that are beyond the means of most filmmakers. However, there are ways around this impediment. First, if you search on the Internet, you will find vendors that own a UPC prefix and will sell individual barcodes for less than $100. Second, some DVD manufacturers are aware of the issue problem and can provide a barcode for your film; CreateSpace is one of them. One word of caution here: If you do end up buying a UPC from a third party, make sure you test it by enrolling your DVD on Amazon's system before you print up 1,000 DVDs with the barcode. That way, you'll be certain it's legitimate. 

So which program is right for you? Well, it all depends on how much time you're willing to invest, and how many DVDs you think you're going to sell. If you think you're going to sell a lot of DVDs, but are very busy and don't want to be hassled with going to the post office, Fulfillment by Amazon or Amazon Advantage will make a lot of sense. Marketplace is a terrific program and works well in partnership with Advantage or on its own, and is ideal for the person who has a niche-type product. Finally, Amazon Affiliates makes great sense no matter which program you're enrolled in. Can't decide where to start? Then I recommend opening an Advantage account to test the waters, and see where it leads. You have nothing to lose and everything to gain, as having your product listed on Amazon will greatly increase the visibility of your film and its sales.  

 

Nick T. Spark is the producer and writer of The Legend of Pancho Barnes (2009) and directed Regulus: The First Nuclear Missile Submarines (2002).  He lives in Los Angeles.

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