There are two sides to the NetFlix success story. What the customer sees and gets, and what the company is able to do and for how much. Getting both halves right is the true secret in my opinion to success on the Web, and here's how the gang at NetFlix figured things out.
On the customer side, two things make renting movies a less than enjoyable experience: Late fees, which actually make up nearly half of Blockbuster's revenue, and limited selection. I would also toss is what I call "bookstore amnesia," or that moment when you're finally in the store and can no longer remember what it is you'd like to read, listen to or watch.
Instead, what if the customer paid a flat fee each month, could hold onto a title for as long as they wished, and had access to the largest library of DVDs available? As a NetFlix member, I pay $19.95 a month and can have up to 4 DVDs out at any one time. The minute I throw the DVDs in the corner mailbox (via a postage paid mailer that comes with the movie) I get the next four on my rental list. If I want to watch video after video, the amount I pay never changes. Likewise, if I never get around to returning a movie, there's no late fee--my rental queue sits ready and waiting for the day the DVD goes back.
Doing it Amazon-style
On the product side, NetFlix won my approval for not re-inventing the wheel. They borrowed a page from Amazon.com and came up with a site that is instantly recognizable and bursting with all the things Amazon does so well--user reviews, custom recommendations and so forth. I can slice and dice movies by genre, actor, director, by user like me, by critic's choice and on and on. It's impossible not to find a movie you want to see, and with a single click, the movies pop into your rental queue. They even send out e-mail newsletters that surprisingly, aren't annoying.
On the money side of things, NetFlix realized that ecommerce works if you mail incredibly light items. Thanks to their small size, DVDs cost the company less than 40 cents to process. The clever mailers arrive addressed to your home, but after peeling off the label they're transformed into pre-paid return envelopes you simply toss in the mail. I usually drop my weekend DVDs in the mailbox on Sunday night and have the next four from my rental queue by Thursday.
To date NetFlix has about 350,000 members which isn't bad for a company that isn't exactly doing the SuperBowl ad thing. They also plan to be profitable this year, which as we all know is easier said than done online.
Customer is king
I should also take my hat off to their customer service. When someone in my household threw away the mailer and jacket that came with a Pedro Almodovar film I rented, I got back the following response in less than an hour. This was from a real person who typed a real response--not a canned message. Here's the actual e-mail:
----- Original Message -----
From: "Web Service" webservice@netflix.com
To: alice@alicehill.com
Sent: Monday, April 30, 2001 3:07 PM
Subject: Re: I have a different question
Hello Alice,
Thanks for your message. I am sorry to hear that you lost the sleeve to
"All About My Mother". Please return the movie wrapped in a soft paper
towel or a tissue to prevent scratching. Please include a note with your
email address so that we can acknowledge the return in a timely manner.
If you have a return mailer from another shipment, you may include two
DVDs in one return mailer. If you no longer have any return mailers at
home, please let us know which title needs to be returned, and we will
send you an additional mailer.
Sorry for the inconvenience.
Thanks,
Albert, NetFlix.com Customer Service
The movie smorgasbord
Obviously, this is a service for someone who regularly rents movies. Otherwise, the $19.95 is a tad steep for the occasional trip to the video store. But if you rent more than five movies a month, this is a great way to see what you want and a ton of other hidden gems, without leaving your seat. Funny, but that wasn't that what the Web was supposed to be about?
Alice Hill was VP of Development and Editorial Director of CNET.com. She regularly writes about technology for ZDNet and Computer Shopper magazine and helps companies abroad build better websites. Her favorite topics include Buying Mistakes Beginners Make, Becoming a Virtual Merchant, Why Geeks Love Scooters and Do You TiVo? She welcomes your comments and *e-mails* alice@alicehill.com.
