June 2000

BY MARC ROBINS

This time, I'm going to change the tune. I'm happy to report that there are, in fact, some players out there that actually have their acts together -- and that there is one company in particular that has so perfected the customer experience that it should serve as the gold standard for all other e-commerce "wannabees."

The company that has won my heart for its stellar e-service and my mind for its killer business model is Netflix.com. This is a company that has created one of the most beautiful Web-based businesses around. Netflix is in the business of selling and renting DVDs (digital video discs), and they have so expertly crafted their business model that no matter how many times I visit their site to conduct a transaction, I leave with a broad smile on my face. Let me elaborate.

The current force in video rentals is the Blockbuster chain of brick-and-mortar outlets, which are planted in virtually every town across the land. The Blockbuster model, while it has been extremely successful up until now, suffers from a number of problems. For one, you must drive to a location, park and enter the store. Then, you must scour the aisles looking for a selection, and, once found, stand in a line to complete your transaction. Later, when you are done watching the tape, you have to return it to the same store to drop it off. If you are like me, this is a hateful thing -- the whole process gobbles up way too much precious time and energy. In a word, it reeks of inconvenience.

The other major problem with Blockbuster is their policy of late fees. Here's a dirty little secret: Fully 40 percent of Blockbuster's revenues are derived from late fees. Yes, Blockbuster is counting on you to be late, and be late often. I once rented a video, only to discover upon getting home that the wrong tape was in the box. I kept the video one day past due, and although I was credited for the initial rental fee, I was charged a late fee for a video I didn't intend to rent in the first place and didn't even watch! Talk about adding insult to injury! It was then that I decided to look for an alternative.

VHS tapes don't mail well, as they are bulky and oversized. Now, consider the DVD. This new video format is taking the video world by storm -- in part, because they not only provide far better resolution and more features, but they are also compact, lightweight and easy to mail. This is the foundation upon which Netflix is built.

Netflix has built an entirely Web-based DVD rental business on the principles of convenience and no late fees. Here's how it works. I register for Netflix's Marquee program online, providing the company with my credit card number for billing purposes. I then proceed to build my movie "queue." This means I can choose from the thousands of DVDs available and add the ones I want to see to a personal rental list, which I can rank in numeric order. Netflix then mails me the first four movies on my list, each one sent in a specially designed, prepaid mailer. Think of the beauty of this: I get home after a long day at work, open my mailbox and find the new release I've been pining to watch! I can keep a movie for weeks or months with no fear of late fees. Or, I can watch the film and then mail it back to Netflix from any U.S. Postal Service mailbox. I can watch four movies, send them back and then get the next four movies in my queue. For movie buffs who rent a lot of videos, Netflix is a dream come true. The cost for this service is a mere $15.95 per month! (One overdue video from Blockbuster can cost at least that much.)

Additionally, the site features are wonderful. I can change the order of the DVDs in my queue at will, and delete selections I no longer want, perhaps because I've seen them on cable or heard a bad review from a friend. In fact, the account management features on Netflix are the best I've seen anywhere, bar none. The other wonderful thing about Netflix is that the company adheres to the honor principle: I can go online and check off movies in my account that I have just returned, and Netflix will immediately send my next movies.

Other features include a great search engine, responsive customer service (via e-mail), targeted e-mail-based newsletters announcing new releases, reviews and ratings by other customers and more.

If you have a DVD player and are looking for a better way to get the movies you want, I urge you to check out Netflix. I guarantee that you will thank me profusely.

The author can be contacted at mrobins@tmcnet.com.