Target and Toys R Us posted overall sales declines during the holidays.
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Netflix competes with companies that offer mail-order movie rentals and/or PC-based film downloads and streaming movies. "We`re bundling them to get an advantage over those who do one or the other," Hastings said.
The new Instant Movie program enables Netflix members to watch movies in real time on a PC. The basic program costs $4.99 for five hours of viewing time, usually two movies.
Rather than present movies as a lengthy download experience, Netflix wanted to differentiate the product by offering virtually instant viewing, after a 15-second buffering period. Movie service customers can stop a movie at any time, leave the site and resume viewing later at the stopping point and skip around various points of a film.
Netflix has 2,000 titles available in the new program so far and video quality meets or exceeds existing DVD technology, Hastings added.
Niche e-retailers innovate
The Scotch Boutique: The Web Is Made for Niches
Fred Lerner, CEO, Ritz Interactive
Doug Nielsen, president and CEO, NetShops.com
Niche e-retailers take different routes to their specialties. NetShops.com started with one web site and built up to 150. Ritz Interactive was formed by a former Kodak film processing lab executive as the photo industry was shifting to digital.
The Internet created an opening for niche marketing and e-retailers like NetShops.com were quick through the door, said Doug Nielsen, president and CEO. NetShops has 150 specialty stores including BarStools.com and Dartboards.com. "The NetShops model is to own and operate stores where we can add value. We try to approach each market with a new view and make it easy to buy those products," Nielsen said at IR2007.
Fred Lerner, CEO of Ritz Interactive, took a more perilous route to niche retailing, surviving the steep decline of the photography industry in the 1990s as photo equipment and processing went digital. Formerly president and CEO of Kodak Processing Labs, a position he took after selling Lerner Processing Labs to Kodak, Lerner in 1999 co-founded Ritz Interactive, a specialty e-retailer that offers branded lifestyle products. Products are loosely linked, their origins driven more by research than kinship, Lerner said.
In addition to RitzCamera.com, WolfCamera.com and PhotoAlley.com, the company owns and operates BoatersWorld.com and eAngler.com, for fishing enthusiasts.
Niche marketing requires equal parts of foresight and nerve. After identifying the web as a new channel for selling digital cameras, Lerner said, "We acquired exclusive rights and licenses to RitzCamera.com. At the time, the business was non-existent."
Sometimes video is better than ads
Blending Video and E-Commerce
Tom Dickson, CEO, Blendtec
There is no comparison between online video and old school methods for getting the word out like print advertising, said Tom Dickson, CEO of blender manufacturer Blendtec, at IRCE 2007. And he should know.
Blendtec created humorous videos showing how its home blender product was so powerful it could blend anything from golfballs to garden rakes to iPods. It uploaded the videos to YouTube and created a site to showcase the videos, WillItBlend.com. The result: Millions of views and online sales that have increased by a factor of five since November, when the campaign began. "We met the goal of our brand awareness campaign," Dickson told conference attendees.
For the cost of a web domain (infrastructure and technology already were in place for the e-commerce site), a few hours of employees` time and the cost of an offbeat selection of items to blend, Blendtec boosted brand awareness, e-commerce site traffic and sales.
For retailers considering online video, particularly when used for viral marketing campaigns, Dickson said such videos must be entertaining and worth watching and allow for interactivity and questions from shoppers. "And you must be honest in every campaign," he added, "which has the potential to be seen worldwide."
Dickson had the chance to prove to conference attendees that the blending he does in the videos is real: He blended a rake onstage. The popular videos also have made Dickson a celebrity. One attendee retrieved the remains of the rake handle that hadn`t made it through the blender and got Dickson`s autograph on it.
Strong integration, strong stores
Why Retail Stores Can`t Put Up Web Stores and Forget Them
Brad Brown, vice president of e-commerce and web strategy, REI
Integrating sales channels has been a key to the success of sporting goods retail chain Recreational Equipment Inc. The company`s executive team concluded that simply having an online store is not enough--a merchant must intertwine it with all aspects of shopping so shoppers know they have different methods and choices.
One way it relied on its web store to bolster business was to open an outlet business online only but market it well in its other channels.
"We have common inventory and merchandising methods for our channels. This allows us to test ideas much easier," explained Brad Brown, vice president of e-commerce and web strategy at REI and one of the Featured Speakers at IRCE 2007. "We looked hard at the outlet concept and how it would affect our stores and brand. So we tested it online, which was a lot easier than allotting store space and figuring out which products would be displayed. It turned out to be very profitable online and strengthened our relationships with our suppliers." Overall, retailers must take chances like this, but not shots in the dark, Brown added.
"For REI, tomorrow is not just placing bets after you figure out what the risks are. Multi-channel retailing is tough--you have to have overarching goals and execute well," he said. "Now we`re exploring social networking and mobile commerce. These are not a matter of if, but when. And that means carefully figuring out when our customers will be ready."
Going small could be big
M-Commerce is Happening--and Retailers Better
Levi Shapiro, director, Telephia Inc.
Jason Jhonson, vice president of product, American Greetings Interactive