A decline in business typically is never good. But for one family-owned company, a downturn in business proved to be a blessing in disguise.
For 23 years, Distribution Video & Audio built its reputation as the nation's largest closeout buyer in the home entertainment industry, specializing in compact discs and DVD sales.
While such sales have been dropping for years, DVA President Ryan Kugler said it was in the last year that the downturn really began hurting his business.
In the end, it cost the company millions of dollars and some employees their jobs, yet Kugler said that drastic decline in business also was the impetus for much-needed change.
DVA was forced to adjust to the times, Kugler said, when the music and movie industries both made moves away from compact discs and videos to Internet downloads.
"We were so closed-minded," Kugler said. "Basically, we needed to think outside the box."
For the Burbank, Calif.-based business, that meant straying from their comfort zone of music, movies and games and adding other items like TVs, iPods, toaster ovens and other small electronics to its product line.
"I thought, 'Why am I not doing this with other products, especially in this time when our sales went from $20 to $16 million?' " Kugler said of their decision to broaden DVA's product line.
DVA buys and sells excess inventory and closeouts from retailers, manufactures, wholesalers, and distributors across the nation. The products are then resold to one of their more than 4,000 clients, which include truck stops, flee markets and online retailers.
"Some people call us a liquidator; I like to call ourselves a secondary wholesaler," Kugler said. "We find a home for unwanted, non-selling products."
Kugler said it was necessary for DVA to start selling additional products like digital frames, clothing, even aviation parts after realizing that one-time hot- selling compact discs were becoming obscure in an age when downloaded music accounts for 65 percent of the industry. With movies heading in the same direction, making a change in business was critical.
"We did this to expand our business and make up for the loss of CD sales," Kugler said. "The process was simple; we just added these items to our business model, as buying and selling a widget is the same as another widget."
Kugler said the change has definitely paid off, increasing the company's sales by $5 million in less than a year, and said it demonstrates that successful businesses can't be afraid to change things up.
The hardest part, Kugler said, is actually deciding to make the change. He suggests reading self-help books that discuss taking risks and making changes.
"That will help motivate you," he said.
Kugler also said making a commitment to the change is also critical.
"Don't just give up on it," he said. "We went through six months of hell to reap six great months."
DV&A Supports Sunscreen Film Festival
Palm Harbor, FL. --
In these notably tough economic times, DVA (Distribution Video & Audio, Inc.) still makes it a point to support the arts. DVA's CEO Brad Kugler who has accepted a board member position with the 5 year old Sunscreen Film Festival (http://www.sunscreenfilmfestival.com/) is also supporting the festival financially as well as photographically (he acts as the festivals offical photographer).
The Festival's purpose is to cultivate local as well as international independent film makers and help them bring their art to a larger market. Kugler claims this is a natural fit for his 20 year old family business he shares with his brother Ryan in Los Angeles. They like to see the little guy win and succeed. "The future of our business depends on new and different ideas in the area of film making that will keep the public coming back for more" he says.
Kugler has also invested his own personal time and his companies money and man power into seeing this small but growing film festival take off.
They have attracted John Travolta and Kelly Preston last year as well as Patrick Wilson and Michael Rooker scheduled to show up this year according to the Festival's website. Last night was the Announcement part for the 5 or so dozen films accepted into the festival which will be held in St. Pete Florida from the 29th-3rd of May.
In addition to used book retailers, another company that is having a good year is the closeout company Distribution Video & Audio. Although DVA has its roots in the DVD and CD market, it has a growing book business and now buys around five million books annually from 50 different accounts, ranging from small to large publishers. Its customers include dollar chains, Wal-Mart, Target and online retailers, as well as independent stores. Ryan Kugler, president and co-owner of DVA, said the company has seen an increase in sales over the past year: "We're doing very well. People like cheap stuff."
Based in Florida and with an office in Los Angeles, DVA generates $15 million in annual sales. Within its book business, children's is the biggest category (about 60%) and is growing, but Kugler noted its bestsellers aren't books in the Twilight or Diary of a Wimpy Kid series. Rather, the books that DVA is selling large quantities of are books that customers at dollar discount stores are looking for. "Twilight's not their demographic," Kugler said. Books in the Bob the Builder and Thomas the Tank Engine series, which DVA can purchase at closeout rates, are more popular.
The company's biggest clients are large retailers, although a growing segment is smaller Internet resellers, whether "Bob's Bookstore Dot Com, eBay or Amazon," said Kugler. Many of the "new and used" resellers on Amazon buy inventory from DVA, for, say, $1.50 per book, and then resell it for $3. Kugler said that many people are launching online retail businesses after being laid off from other jobs. Kugler said he likes having dollar discount chains and Internet resellers as clients because they typically order 500 to 1,000 books at a time and pay cash. And "they keep reordering because they keep selling."
We already gave VHS a proper burial after JVC became the last firm to shut the door on VHS player production, but there was still one nail in the coffin that wasn't quite hammered shut. Today, it all ends. The last notable distributor of VHS films -- Distribution Video Audio out of Palm Harbor, Florida -- has shipped its final truckload of tapes, probably to a small town library or a mom 'n pop shop in a place you'll never hear of. According to co-owner Ryan J. Kugler: "It's dead, this is it, this is the last Christmas, without a doubt." An unceremonious way to exit, sure, but we have a sneaking suspicion that it'll one day be able to say it made it longer than practically every other physical film format that succeeded it. Here's one last tear for the format that was -- now, time to plan a trip to the local flea market.
Pop culture is finally hitting the eject button on the VHS tape, the once-ubiquitous home-video format that will finish this month as a creaky ghost of Christmas past.
After three decades of steady if unspectacular service, the spinning wheels of the home-entertainment stalwart are slowing to a halt at retail outlets. On a crisp Friday morning in October, the final truckload of VHS tapes rolled out of a Palm Harbor, Fla., warehouse run by Ryan J. Kugler, the last major supplier of the tapes.
"It's dead, this is it, this is the last Christmas, without a doubt," said Kugler, 34, a Burbank businessman. "I was the last one buying VHS and the last one selling it, and I'm done. Anything left in warehouse we'll just give away or throw away."
Dumped in a humid Florida landfill? It's an ignominious end for the innovative product that redefined film-watching in America and spawned an entire sector led by new household names like Blockbuster and West Coast Video. Those chains gave up on VHS a few years ago but not Kugler, who casually describes himself as "a bottom feeder" with a specialization in "distressed inventory."
Kugler is president and co-owner of Distribution Video Audio Inc., a company that pulls in annual revenue of $20 million with a proud nickel-and-dime approach to fading and faded pop culture. Whether it's unwanted "Speed Racer" ball caps, unsold Danielle Steel novels or unappreciated David Hasselhoff albums, Kugler's company pays pennies and sells for dimes. If the firm had a motto, it would be "Buy low, sell low."
"It's true, one man's trash is another man's gold," Kugler said. "But we are not the graveyard. I'm like a heart surgeon -- we keep things alive longer. Or maybe we're more like the convalescence home right before the graveyard."
The last major Hollywood movie to be released on VHS was "A History of Violence" in 2006. By that point major retailers such as Best Buy and Wal-Mart were already well on their way to evicting all the VHS tapes from their shelves so the valuable real estate could go to the sleeker and smaller DVDs and, in more recent seasons, the latest upstart, Blu-ray discs. Kugler ended up buying back as much VHS inventory as he could from retailers, distributors and studios; he then sold more than 4 million VHS videotapes over the last two years.
Those tapes went to bargain-basement chains such as Dollar Tree, Dollar General and Family Dollar, and Kugler's network of mom-and-pop clients and regional outlets, such as the Gabriel Bros. Stores in West Virginia or the Five Below chain in Pennsylvania. If you bought a Clint Eastwood movie at the Flying J Truck Stop in Saginaw, Mich., or a "Care Bears" tape at one of the H.E. Butts Grocery stores in Texas, Kugler's company probably put it there. He also sells to public libraries, military bases and cruise ships, although those clients now all pretty much want DVDs.
Kugler estimates that 2 million tapes are still sitting on shelves of his clients' stores across the country, but they are the last analog soldiers in the lost battle against the digital invasion. "I'm not sure a lot of people are going to miss VHS," he said, "but it's been good to us."
If you rewind back to the 1980s, VHS represented a remarkable turning point for the American consumer. For the first time, Hollywood's classics and its recent hits could be rented and watched at home.
"It was a sea change," says Leonard Maltin, the film critic and author who has written stacks of books to meet the consumer need for video recommendations. "Hollywood thought it would hurt movie ticket sales, but it didn't deter people from going to movies; in fact, it only increased their appetite for entertainment. Hollywood also thought it would just be a rental market, but then when someone had the idea of lowering the prices, the people wanted to own movies. They wanted libraries at home, and suddenly VHS was a huge part of our lives."
The format was easy to use (although fast-forwarding and rewinding to any particular spot was the worst new-tech irritant since the telephone busy signal) and, of course, the videocassette recorder and blank VHS tapes made it possible to catch up on any missed must-see TV, whether it was "Days of Our Lives" or "Monday Night Football." Hollywood found that movies also enjoyed a second opening weekend, as viewers throughout the country made Friday night trips to the rental store for new releases.
"I think in some ways it even pulled families together, if that doesn't sound too corny, because renting movies became such a part of the weekend," says Jim Henderson, one of the owners of Amoeba Music, the 45,000-square-foot merchant in Hollywood that sells pop culture in just about every format imaginable, including VHS. "It was also a great thing for film fans. You could educate yourself and go back to the well again and again. We're used to choice now, but that was the first time fans could watch what they wanted when they wanted."
Amoeba no longer buys VHS from distributors such as Distribution Video Audio. But customers bring in tapes every day to trade and sell. "We actually sell maybe 200 a day, almost all of them between $1 to $3," Henderson said. "Almost the same amount comes in as goes out."
A lot of those are the classic or foreign films that are not available on DVD, such as "The Magnificent Ambersons" or Gregory Nava's "El Norte," or vintage music videos by punk bands or new wave pioneers such as Black Flag or Siouxsie and the Banshees. Some older customers simply don't want to switch to DVD, others just like the bargain-basement price of the tapes.
But, Henderson said, unlike with vinyl records, no one seems to cling to VHS for romantic reasons.
"DVDs replaced VHS really fast compared to other format changes through the years," Henderson said. "VHS took too long to rewind, they were boxy and cumbersome, the picture was kind of flawed. The tape inside was delicate and just didn't hold up. DVD just blew it away."
It's true, the VHS tape never really had a chance once the DVD arrived in the late 1990s with all its shiny allure -- higher quality image, nimble navigation and all that extra content. After a robust run at the center of pop culture, VHS rentals were eclipsed by DVD in 2003. By the end of 2005, DVD sales were more than $22 billion and VHS was slumping badly but still viable enough to pull in $1.5 billion. Next year, that won't be the case.
Just before Halloween, JVC, the company that introduced the Video Home System format in 1977 in the United States, announced that it would no longer make stand-alone videocassette recorders. The electronic manufacturer still produces hybrid VHS-DVD players, but it's not clear how long that will last.
For a format that made Hollywood so much money, VHS leaves behind a shallow footprint in the movies themselves. There was "The Ring," a 2002 horror movie and its 2005 sequel, about a mysterious VHS tape that brings death to whoever watches it, but that's a sad valentine. This year Jack Black and Mos Def starred in "Be Kind Rewind," a loopy comedy that finds its center at a VHS rental store that is holding out against the DVD era, but the rebellion didn't go beyond the script -- the movie is available for rent or purchase on DVD and Blu-ray, but it was never released on VHS.
The format was also name-checked in "The 40-Year-Old Virgin," the 2005 hit film that stars an unloved salesman at an electronics store; and even he has no room in his heart for the underdog format. "It's a dead technology," he explains to a customer. "It's like buying an eight-track player."
Kugler is one of the rare people who can stir up some nostalgia for the black, boxy tapes. His father bought Distribution Video Audio in 1988 and carved out a niche as an inventory supplier for the video rental stores that were popping up everywhere. His young son was interested in a different end of the entertainment business; the younger Kugler spent many afternoons in his teen years sneaking onto the Paramount Pictures studio lot and soaking it all in. While watching the cast at work on "Planes, Trains and Automobiles," he decided he wanted to become a filmmaker; soon, the kid who was always underfoot on the "Cheers" set even coaxed Ted Danson to appear in a two-minute film he made.
But life took Kugler on a less glamorous path. He started working at Distribution Video Audio in 1991 and in short order took the company to new heights by negotiating directly with studios to buy their overrun inventory.
The approach led the company beyond VHS, and soon Kugler's warehouses were filling up with CDs, books and merchandise like "CSI: Crime Scene Investigation" wristwatches and "America's Next Top Model" T-shirts.
A casual observer might wonder how much shelf life those sorts of products could possibly have, but Kugler has moved hard to the Internet and says the "scavenger culture" mentality and sites such as Half.com, Amazon Marketplace and EBay have made it easier than ever to match narrow-niche and oddball customers with the products they want -- especially when it's priced to go at $2 or $3.
With some things, though, even Kugler the great salvager can't find a buyer no matter how low he goes. He took a loss on 50,000 copies of "Yo-Yo Man," a Smothers Brothers instructional video for the stringed toy. ("I'm not sure what I was thinking on that one," Kugler said.) And then there is that stash of VHS tapes that couldn't even earn a spot on the last shipment out of his warehouse: a few thousand copies of "The Man With the Screaming Brain," a 2005 horror movie about a mad scientist, a Bulgarian tycoon, a cab driver and some cranial misadventures. ("That one," Kugler said, "will be buried with us.")
The majority of his firm's business today is with big box retailers including Target, Wal-Mart, K-Mart and Sears, where the company sets up displays of its discounted DVDs, such as "Superman Returns" and "Proof of Life," which are often priced at $10 or less. Plenty of customers see that price as an invitation to build up their DVD collections.
But Kugler, with a sly smile, offered a warning to consumers thinking of putting up shelving to handle their burgeoning libraries.
"The DVD will be obsolete in three or four years, no doubt about it. Everything will be Blu-ray," Kugler said, anticipating the next resident at his pop culture retirement home. "The days of the DVD are numbered. And that is good news for me."
Entertainment media liquidator says their days are numbered
What happens to all the old stuff?
Discarded computers, cell phones and televisions are often stripped for parts, reconditioned and resold or melted down in some end-of-life electronics processing plant.
Other artifacts of the ceaseless churning of media do not enjoy such adaptability.
They are, in fact, piteously irreducible.
We speak of unloved media formats such as VHS and cassette tapes; video games for discontinued consoles; and, increasingly these days, CDs.
Just this year, another format went the way of the eight-track: the HD DVD.
Mercifully, there is an afterlife for these electronic critters.
In the early 1990s, Ryan Kugler, president of a Burbank, Calif.-based company called Digital Video & Audio (DVA), jumped on a market opportunity to wring the last vestiges of profitability out of dead or dying formats.
Mr. Kugler's home-entertainment closeout company buys surplus inventory from Hollywood studios and other media sources and sells them to all manner of interested parties across the country: dollar-discount retailers, flea markets, truck stops, zoos, museums, gift shops.
If you happen by the discount bin at Wal-Mart or a gas-station market, there's a better-than-average chance it originated from one of DVA's two giant warehouses outside Tampa, Fla. (The company temporarily rents storage space in other regions, as needed.)
Staggeringly, the company moves up to 22 million units a year, including movies, CDs, cassettes, books and toys.
Mr. Kugler says DVA already has sold a few million HD DVDs, the Toshiba-backed high-definition DVD format that was vanquished once and for all by Sony's rival Blu-ray.
"It's a fun business," he says.
DVA, a family-run operation that generates about $25 million in annual revenue, began in 1989 as a used-video distributor. "Back then," Mr. Kugler says, "video stores were opening up left and right."
In 1994, he says the company received "an interesting call about a very large amount of new VHS Hanna-Barbera videos." He bought the whole batch and resold it to Target.
From then on, Mr. Kugler began trolling the studio circuit in search of excess inventory. Studios are loath to talk about DVA's liquidation business; to do so would be an admission that they overshot the market for a given title.
No matter Hollywood's prideful reticence, DVA's business model is a successful one that thrives on perpetual technological obsolescence. "As the format goes away, we find the last few retailers," he says.
According to the Los Angeles Business Journal, the company found a cozy niche between Hollywood giants and mom-and-pop retailers.
With bricks-and-mortar establishments such as Tower Records disappearing, DVA has begun cultivating the burgeoning number of online guerrilla retailers, too. "We deal with a lot of larger Internet-based companies," Mr. Kugler explains. "People work from home and sell items on the Internet."
A veritable historian of video and audio media, Mr. Kugler recalls the sloughed-off formats from the faraway galaxy of the '80s and '90s, from the laserdisc to the digital audio cassette.
The shortest-lived format of them all, he says, was an early competitor of the DVD - Circuit City's Divx videodisc, which could be thrown away after viewing, thus avoiding a return trip to the video store. However, the format required a proprietary set-top box, and the (now-bankrupt) electronics retailer failed to persuade Hollywood studios to get on board.
"That failed immediately," Mr. Kugler recalls.
The success of Internet music downloading has been a boon for DVA's CD business; this year marks the first time CD sales have been on par with those of DVDs.
Mr. Kugler speculates that the next casualty of the Darwinian format churn will be the standard DVD; in the not-too-distant future, he says, Blu-ray will rule the home-video universe.
Hollywood sees Blu-ray, whose picture quality can't be downloaded via the Web, as the ultimate antidote to the poison of piracy - a solution that so far has eluded the music industry.
If and when standard DVDs find themselves on life support, a couple of warehouses in Tampa are ready to provide technological hospice care.
Retailers across the country prepare for the worst and hope for the best.
Georgetown Gifts, which sells cards, candles and teddy bears in Ann Arbor, Mich., is in the shivering shadow of the one of the nation's largest and most beleaguered employment sectors--the American auto industry. As you might imagine, with General Motors Corp., Ford and Chrysler suffering from dire sales, the local mood on the eve of the holidays is morose. The husband of Georgetown owner Laurie Wicks is an engineer at GM, so she senses the gloom all too well.
"It's almost paralyzing," she says. "People here are very apprehensive. We're just hoping for the best."
On that note, Wicks is putting on a happy face, offering a nearly 20 percent discount for Thanksgiving-weekend shoppers and giving everyone through the door a free holiday ornament. She's boosted marketing with ads in local publications, an e-mail blitz and a holiday open house to kick off the season. She emphasizes that retailers that show appreciation for regular customers will benefit.
"Eighty percent of your business is 20 percent of your clients," she says. "When they walk in here, I hope my customers feel they're away from the hustle and bustle." Still, Georgetown Gifts has tightened up its holiday inventory. Some items were ordered at half their normal count, Wicks says, and higher-priced goods, such as the $50 teddy bears she once carried, are no longer on the shelf.
"I think people are still going to buy," she says, "they're just not going to spend as much. They can still come in and buy very nice gifts in the $10 to $25 price range." Hobby Works, a chain of four stores with an online arm in suburban Washington, DC, is more bullish on the holidays. President and founder Mike Brey has boosted advertising 50 percent, increased his e-mail blasts, stocked up on inventory and initiated a tax-free sale for Thanksgiving weekend. That's on top of his regular marketing efforts, which include direct-mail offers to about 5,000 repeat customers: Recent purchasers are rewarded with gift cards worth about 3 percent of what they spent on their last visit, courtesy of the chain's point-of-sale software.
"In my business, you're talking about nearly 25 percent of your sales and a bigger percentage of your profits coming from the holidays," Brey says. "So everything you do is magnified by this season. I'm closing my eyes, plugging my ears and pulling the trigger." With Christmas falling on a Thursday, Brey knows re-ordering inventory will be difficult if not impossible. Therefore, Hobby Works has stocked up, including purchasing goods for pennies on the dollar at area bankruptcy and going-out-of-business sales. Store staples such as train sets and remote-control airplanes are fully stocked as well. Brey says having the goods will come in handy for a shopping season that he predicts will be late breaking.
"Two weeks before Christmas you will start having big days and big weekends," he says, "and if you don't have stuff on the shelf to sell, you're not going to have the numbers." Indeed, some sectors of retail are actually looking up for the holidays, especially as price points go down.
Take Distribution Video and Audio, a DVD-movie wholesaler based in Burbank, Calif., whose clients include 99¢ Stores and K-Mart, for example. The $25-million-a-year company is booming because big-box retailers and independent shops are stocking up on its closeout titles, which often retail for $9.99 and less.
"Entertainment does well in recession because people want to get away from the stock market and the news," says DVA president Ryan Kugler. "The economy has affected us in a positive way. The retailer is looking for a deal, and when they can buy a movie from us for a buck or two, they can't go wrong." Kugler says retailers that double down on marketing efforts when the economy goes south will survive.
"Stop watching the news," he says. "We keep cold calling potential clients and finding new accounts. Go out and offer whatever promotions you can. There are so many ways you can promote yourself. We do e-mail blasts, and we do personal letters to retailers. Just do it."
Tom Hoeck, director of marketing and sales for 3-year-old ACandyStore.com, a direct-to-consumer online retailer, seconds that emotion. The growing confectioner has had robust banner advertising, e-mail blasts, online coupon codes and direct mail appeals to its customers this holiday season. Hoeck says, "You just have to be aggressive with your marketing."
Orders are up so far this year, but the amount of candy each customer buys is down, Hoeck says. That evens out so that, at least in American candyland, it's not all doom and gloom. In fact, he says, "It's going to be business as usual."
DVDs start making cents Websites selling movies for cheap By DANIEL FRANKEL
"The Matrix" grossed more than $460 million in worldwide B.O., spawned two sequels, revolutionized visual f/x technology and kickstarted the careers of the Wachowskis. But visit movies4wholesale.com or any number of other online DVD wholesalers and you can readily buy the film on disc for around $3.50. Visit closeoutvideo.com and you can also peruse onetime awards contenders like "Before the Devil Knows You're Dead" and "Lars and the Real Girl" -- available for less than $7.
Clearly, the wholesale business for recorded movies is booming. But will this discount dynamo cut into Hollywood's library values?
Ryan Kugler, prexy and co-owner of Distribution Video & Audio, which operates closeoutvideo.com, says his operation is set to distribute 20 million titles this year, up 10% from 2007. He's finding plenty of inventory to sell right now, with studio homevid divisions often overshooting the mark on their shipment numbers and offloading the excess to wholesalers.
A small but considerable number of top titles are also still floating around on VHS and the now-defunct HD DVD format.
"We're buying this product for under $2 a unit and we'll make 10 to 15 points on average," says Kugler, who sells some of those tapes and discs directly to consumers on sites like dvdcloseout.com. Most are sold in bundles of hundreds or even thousands to other online direct-to-consumer wholesale operators, many of which do their thing on eBay.
With more and more bargain-conscious movie-buyers discovering these sites in a tight economy, sales have been brisk. Kugler estimates the U.S. DVD wholesale market is worth somewhere around $1 billion annually.
Harder to estimate, however, is what the effect is to studio libraries.
Studio homevid execs tout emerging formats like Blu-ray and digital downloads as the future of post-theatrical distribution, upholding the margins for new releases and older film and TV titles alike as movie buyers switch over to the newer technologies and leave behind the old ones.
But with Wall Street in turmoil and consumer confidence at generational lows, the question remains: How many more times can pics like "The Matrix," be sold on Blu-ray and on cable when consumers can buy them on VHS on eBay for 99¢?
Distribution Video and Audio (DVA), one of the largest buyers and sellers of excess video and audio inventory in the United States, celebrates its 20th year of operation this September.
The family-owned and operated business, which began in 1988 selling 100,000 units a year, has an account base of more than 350 companies and sells more than 20 million units per year, generating $20 million in annual sales.
"It's a tremendous accomplishment for any firm to be in business for more than 20 years," said Ryan Kugler, president of DVA. "Our achievements are even more significant when you examine the context of the entertainment industry and the radical changes that have taken place within it over the last 20 years."
DESCRIPTION OF THE AWARD: Gulfcoast 500 Largest Companies
FOR WHAT WAS IT GIVEN: Being one of the 500 most successful companies on Florida's Gulf Coast (ranked by size and revenue)
WHO GAVE IT: Gulf Coast Business Review
DESCRIPTION OF THE ISSUER OF THE AWARD: http://www.review.net/index.asp Per their website - "The Gulf Coast Business Review is Southwest Florida's weekly newspaper for Trends, Companies, Entrepreneurs and Law." This weekly paper covers the entire Gulf Coast of Florida, including: Hillsborough, Pinellas, Pasco, Manatee, Sarasota, Charlotte, Lee and Collier counties.
WHEN WAS IT GIVEN: August 2008
Tampa Bay Business Journal
DVA responds to obstacles with change Constant reinventing keeps video distribution rolling
Tampa Bay Business Journal - by Robert Yaniz Jr. Editorial assistant
PALM HARBOR — Brad Kugler, COO of Distribution Video & Audio, was still in school when his father, Ben Kugler, and a couple of partners bought the company, then known as Distribution Video Inc., for about $300,000 in 1988. Today, Brad Kugler has developed DVA into a $22 million company.
In its early years, DVA's primary business was providing VHS cassettes to Blockbuster Video stores throughout the nation. However, by the mid-1990s, the popularity of independent video rental stores began to wane, causing a radical shift in focus and the termination of 12 DVA employees.
Soon, DVA began buying overstocked, consumer-returned and liquidated items and filtering them through several distribution channels, including Internet retail, discount retailers and niche markets, such as schools, libraries and eBay sellers. The company has approximately 2,500 active customers but 80 percent of its profits comes from a handful of discount chains, such as Dollar General, Family Dollar and Dollar Tree.
Piracy has had no affect on DVA, Kugler said. In fact, its CD business has increased in the last year, as has its VHS market.
Kugler attributes this to the plummeting prices of such items, which allows him to sell them for even less. "If the world went digital, our business life would exceed a decade beyond that because it filters through our closeouts and reverse logistics."
During the dot-com craze of 1999 and 2000, DVA branched into the Internet, but just as orders began to reach their height, the company was again forced to cut back. "Obviously, there's some sex appeal in having a Web site and selling 5,000 orders a day and being some dot-com hero, but it was a nightmare," said Kugler.
Instead of hosting its own site, DVA began to sell its products wholesale to existing sites, and the business was quickly back on track.
Weathering ups and downs Having weathered another storm, DVA launched its own label, First National Pictures, in 2005. Although the intention was to license titles and transform DVA into its own studio, the venture backfired, and the company ended up losing $1 million. After about a year and a half, Kugler abandoned the concept.
Each of these obstacles has caused DVA to re-invent itself, and Kugler said that they have helped the company grow. "Each time, we've sort of adapted and found a new revenue stream," he said.
Revenue has dropped 5 to 10 percent this year, but Kugler said that DVA remains at the top of the "entertainment liquidation business," though he's unsure of its market share.
"[During] our 20 years in the business, we kind of nailed down what's a good buy and what's not," said Kugler. "It's really all about the purchasing."
Technology rules Gene Gross, owner of Video Group Distributors, sees plenty of opportunity in the industry. Video Group Distributors provides wholesale DVDs to merchants, drugstores, truck stops, convenience stores and kiosk rental machines.
"There is success to be had in that," he said. "It depends on the continued diversification of acquisitions through consumer price points."
One of the three original owners of DVA, Gross left the company in 1991 to start his own business. While his venture has continued to thrive, he acknowledges that the industry is in a transitional stage once again, thanks to the introduction of Blu-ray.
"What makes a difference is the willingness of management to persist in wake of these changes and adjust," said Gross.
As for the future of DVA, Kugler believes the company's growth may have reached a standstill, since its prospects have diminished.
"Being around this long, you've pretty much sold to everybody," he said.
The next step is to acquire a company that will complement DVA's services, an objective still in early development.
In addition, Kugler is keen to return to his goal of owning content and hopes to eventually consolidate DVA's 25,000-square-foot Palm Harbor headquarters and its 12,000-square-foot Clearwater warehouse into a single 50,000-square-foot property. It's all part of his plan to hit $50 million in annual revenue in the next five years.
"The challenge is always to buy correctly, especially in a down economy, because there's so much good product out there," Kugler said.
The harsh economy may make buying decisions tougher, but it has its advantages, at least for his industry, he said.
"We get a little pressure, but it's an opportune time because when there's a recession, people always like cheap entertainment, which is what we provide," said Kugler.
Info BUSINESS: Distribution Video & Audio ADDRESS: 133 Candy Lane, Palm Harbor NATURE OF BUSINESS: Entertainment distribution PHONE: 727.447.4147 WEB: dva.com
A NEW Way to communicate with our Customers
DVA has just set up a Twitter account at twitter.com. For those of you whom already have a twitter account no explanation is needed. For those of you who do not, I strongly encourage you go to www.twitter.com (very simple site) and set one up; here are the reasons why!
As you know DVA gets in some GREAT product at UNBEATABLE prices. Our biggest problem is getting the word out to our customers in the most efficient way. After thorough research twitter actually can accomplish this for us. Since twitter works with cell phones as quickly as it works with emails, all parties whether out in the field or in their offices can be notified of JUST IN Deals simultaneously.
We will announce our specials on twitter. Those who follow us will be the first to know. If you have device updates turned on (again you must be familiar with twitter to understand this), you will be proactively notified on your cell phone (SMS) or email or desktop application the second we post something. No need to log in or check your emails.
So please follow dvaspecial on twitter ASAP. If you are not a twitter subscriber, we encourage you to subscribe ASAP.
Thanks, The team at DV&A
DV&A, Inc. on NBC's Daytime Show
Here is a great TV spot about DV&A that is both informative and entertaining… see the people and the place where you get your products!
First link is to YouTube and the second link is higher quality but requires QuickTime.
…. and many thanks from the team at DVA!
Tampa Bay 2008 Fast 50
DESCRIPTION OF THE AWARD: Tampa Bay 2008 Fast 50
FOR WHAT WAS IT GIVEN: Being one of Tampa Bay's 50 fastest-growing privately-held companies in 2008. Ranked by percentage of revenue growth from 2005 to 2007
WHO GAVE IT: Tampa Bay Business Journal
DESCRIPTION OF THE ISSUER OF THE AWARD:
http://tampabay.bizjournals.com/tampabay/stories/2008/06/23/daily10.html Tampa Bay's premier weekly business newspaper, part of parent company American City Business Journals, which has 41 newspapers across the country
WHEN WAS IT GIVEN: July 2008
Warehouse Sale - 1 Day only! (DVD, CD, VHS, Games, etc.) - $1
DVA.com is having it's 3rd Annual Shop Our Shelves Sale! This has become a very popular event in northern Pinellas County. DVA, a 20 year old Media distributor opens its bay doors to the public one day per year. Literally millions of CDs, DVD, VHS, Video Games, Apparell, Electronics are all being closed out for pennies on the dollar. Prices range from $50 - $0.50 (most items around $1-$3)
Distribution Video & Audio, Inc. showcased on the Reelz Channel.
DVA, Inc. Award Spot on Inc. 5000 Fastest Growing Companies!
Distribution Video Audio is proud to announce our inclusion in the 2007 Inc 5000 – The Fastest Growing Private Companies in America. If not for you, our customer, we would not have had the opportunity to grow our business in to what it is today. By providing great value to our customers and ultimately to the consumer, you have helped make every day at DV a rewarding and enriching experience.
We are proud to have you as our customer and look forward to continued success! We thank you!
DVAspecial.com is a Wholesale Distributor for online eBay Yahoo Amazon and offline retail resellers.
Let DVAspecial.com supply you with great Movies Music DVDs CDs and more at way below wholesale pricing!