Drive-thru ‘stores’ dispense discs
Automated systems stock 5,000-10,000 titles
By Jennifer Netherby -- Video Business, 10/11/2005
OCT. 11 | An entrepreneur in Virginia has taken DVD kiosks to the next level—a fully stocked and fully automated video store.
Richard Nehrboss opened DVDs On the Run this summer in Fredericksburg, Va., after spending two years developing a robotic system that grabs DVDs off shelves and passes them to customers through a drive-through window, deleting the need for store employees.
Unlike kiosks, the store is stocked with 5,000 DVD titles and is able to carry up to 10,000 titles, giving customers a bigger selection. Developing the robotic system and opening the first store cost a hefty $1 million-plus, which Nehrboss personally funded along with the backing of several financial partners.
Nehrboss expects to make up the investment by opening more stores along the East Coast with the help of private investors. He expects future stores to cost closer to $200,000 to open because the robotic system has already been developed.
The first store is already paying for itself, without counting the initial investment, he said. The stores net margins are roughly 40%.
“One of our stores can make more money on less [revenue] than a typical Blockbuster,” Nehrboss said.
That’s because DVDs On the Run spends 90% less on labor costs than a typical video store. The touch screens also recommend catalog titles when a customer types in a rental, which helps to increase catalog rentals and overall profitability, Nehrboss said.
DVDs On the Run customers drive up to a window, type in their movie rental requests on the touch screen, swipe their credit card and wait for a robotic arm to grab the title. The store charges $3.29 for one-day rentals, $3.69 for a two-day rental and $3.99 for a five-day rental. Customers are charged a $1 a day late fee up to the cost of the movie. The store operates 24 hours a day.
“We can watch revenue come in when everybody else is closed,” Nehrboss said.
During its first three months of operation, DVDs On the Run has had 2,000 unique customers, with no marketing. The store is on the same street as a Hollywood Video, Blockbuster Video, Movie Gallery and Video Club.
Nehrboss, a technology guy who retired after selling his computer services business at age 27, developed the robotic system to sell to a larger rental chain. He later decided to develop it as a stand-alone business.
“The idea was to take new technology to older industries, in this case video rentals,” he said.
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