Client Problem

A large telecommunication service provider starts up an online DVD rental service.

The telecommunication service provider had been in negotiation with all of Australia’s major DVD distributors to sign mutually acceptable business terms towards the purchase of their whole DVD back catalogues and monthly new release DVDs. The key business driver was to launch with the largest catalogue of DVD titles available in Australia. The business goal was to launch with 8,000 DVD titles, and to have 8,500 DVD titles available to customers within a month. Two months before launch, most deals were finalised but no DVD deliveries had occurred. 
 

SMS Approach

An SMS consultant managed the project on behalf of the client, negotiating terms and managing vendor relationships.

An SMS consultant with sourcing and vendor management skills was placed with the client to manage the project. He was specifically tasked to negotiate acceptable commercial terms for sourcing the back catalogue and monthly new release DVDs from all the distributors. Once the catalogue and stock levels were under control, he was to manage the vendor relationships, from an operational and commercial basis, which was seen as one of the keys to success for the venture. 
 

Recommendation

SMS took over commercial negotiations and finalised trading terms with every Australian distributor of DVDs.

The SMS consultant: 

• ensured initial deliveries of DVDs arrived at client distribution centres (DVDs were being loaded into stock almost 24 hours a day in the week leading up to launch and through the product launch period)
• provisioned and actively managed the DVD purchasing process on a daily basis
• on behalf of the telecommuncation company, assertively managed the vendor relationships
• provided marketing analysis on which DVDs were performing well with customers, which DVDs could be retired from stock, and which DVDs were out of stock
• produced a DVD title-based promotional and marketing plan
• produced and managed the online content strategy for the customer web site
• specified content-based improvements to the web site
• successfully negotiated the provision of recommendation services from a specialist vendor
• successfully transferred the role over to an in-house manager at engagement completion
   

Outcome

The new service became market leader within six months.

Through dynamic management practices, SMS was able to meet and exceed the client’s target: the venture had 10,500 DVD titles available at the time of launch and 14,500 titles a short time later.