What happens to be one of the most successful video-streaming platforms was once purely a movie rental service. Did you know that Netflix now constitutes 15% of the world’s internet bandwidth? Well, I didn’t too (until I researched for this article of course). This internet giant was not an overnight sensation, but rather a result of multiple trial and errors over many years. It has deeply integrated with our daily lives that the world has evolved into a verb we commonly use — ‘Netflix n chill’ (hold your thoughts) or just ‘Netflixing’. More than just offering an extensive range of shows to watch, Netflix is the perfect case study for businesses to learn from. From product development, branding, cost leadership, unlimited subscription and cutting-out-the-middle-man business model, these are some of the ways that grants Netflix the competitive edge. If you’re looking to grow your eCommerce platform in Singapore, strap on.
The product development strategy is the idea of developing new products or modifying existing ones to increase business revenue. This was exactly how Netflix started out. Reed Hastings was once late to return Apollo 13 at his local movie rental store and had to pay $40. This inspired the idea of a movie-rental business by mail in 1998. This was a game-changer at that time. Not only did this differentiate them from their competitors of movie rental stores, but it allowed them to grow their consumer base by heaps. Till today, the company has continually progressed and now focuses on technology to deliver the best experience for its users.
Ecommerce businesses are also required to be at the forefront of technological innovations to keep their business competitive. From enhancing search functions to devising an online voucher redemption system, businesses have much to explore to optimise the user experience (UX) on their eCommerce website.
A Branding Strategy
Besides the typical logo changes, Netflix went far and beyond to transform its branding positioning strategy. Having built its narrative and personality thus far, users of the platform know it for its casual and witty social media presence. When you think of video streaming, you think of ‘Netflix’. Being the top-of-mind brand for consumers is a big win for business all around. So how do you make your eCommerce brand the platform for consumers to purchase from?
Cost leadership refers to offering a lower price as compared to competitors within the same market so as to gain a loyal and large following. Let’s face it, we all lean towards what’s more affordable. Although not entirely cheap, you can say that Netflix is reasonably priced for the unlimited service they offer. Study the Netflix subscription fees and you’ll notice that they offer quite a range of prices for what you might want to pay. Simply put, you pay more and you receive more (and the more people can leech on your account). Although not the cheapest alternative, they do score in gaining a large consumer base across various markets.
Hence, we can identify that offering the lowest prices may not necessarily yield the best results. Acquiring customers with reasonable prices that correspond with your service or product is one way to consumers’ hearts.
Netflix was built on this sole business model. Consumers have unlimited access to all shows by paying a flat amount each month. This gives the brand a competitive edge and has been proven to successfully grow its revenue even with an acceptable price range. Essentially, its main source of income is from the subscription fees. Thus, it brings us back to the above point of maintaining cost leadership in the market and being tactical while at it.
Many platforms from Taobao to ASOS offer express delivery on a yearly plan at a fixed rate. This beats having to wait 2-3 weeks or even a month each time or paying an additional $40 just so you could receive your goodies in 2 days. Both platforms work in the same fashion so finding the middle ground is what’s important. You don’t want to come off as too cheap or too expensive so as to make sure you’re able to cater to various purchasing powers.
Bypassing intermediaries and selling directly to consumers, Netflix thrives on this business model by acting as a distributor of various TV shows, documentaries and movies. Not only does this save cost in terms of sales, but it also avoids unnecessary process in traditional marketing or other distribution costs. Attributing to Netflix’s growth strategy, the company earns especially when they market directly to consumers for its own shows. If you’ve heard of Orange Is the New Black or Money Heist, then you’d know that these successful shows are Netflix Originals which are exclusive content only to Netflix. This competitive advantage now allows the company to efficiently distribute its original content.
So if you’re an eCommerce business with products of your own to feature, the ball’s in your court. There is no need to go out of the way to advertise or market your products or even engage a third-party to do the selling for you, you can do it all.
That’s our round-up for the 5 ways that Netflix can inspire your business strategy. With the proliferation of the internet, businesses are able to transform their models and strategies. At the core of it all, always remember to communicate around your company’s purpose. If you’re looking for an eCommerce developer or eCommerce digital marketing right here in Singapore, we’ve got you. Have a kopi session with our brand guardians and let them fill you in on what we can do for you.