Netflix is one of the most impressive companies of the web era. Their home delivery service unseated long time movie superstar Blockbuster forcing it into bankruptcy. As of July 8th this year, their stock had gone up 3,300% and was trading at 295.14. The reason their stock was trading so high was because investors could see a pattern of repeated successes. Netflix repeatedly set expectations and outperformed. They were following the Apple model in this regard. But that changed this July.

Their price hike and more specifically their mishandling of their price hike dulled the shinning armor a bit. Then the qwikster debacle (or however you spell it) was a second ding. What has happened, is this the end of Netflix … no way!

Netflix will learn from these missteps. They will get a rock star customer service team in place, and they will reap the benefits from both of these issues. Here are the big changes I see:

1. Higher price creates margin. Margin is the key to building a big business. With it, you can run more advertising, acquire more customers, run promotions, and build up cash. High margin businesses are worth more and they will do more. For startups, you will make decisions early on, high margin or low margin … remember that high margin is always more interesting … ALWAYS!
2. Internet TV and movie distribution has much more upside. Americans watch over 5 hours of TV a day. Puke! But the reality is that this is the truth. Moving more of that to the web is inevitable. Moving the ad dollars to the web is inevitable. Netflix will win big on both of these points. For Startups, you can either try to make a market or get in the way of a market that is being made, both are interesting, but the later allows for you to grow without the same level of investment. Think about all of the eCommerce companies that got to claim 20% per year growth just because eCommerce was growing by 20%.
3. Netfilx will grow its user base 4x in the next 3 years. This ties to the two points above and the most applicable for investors (note, I do not invest in Netflix) … Netflix will grow organically in a dramatic way over the next 3 years, and at a much higher margin. $80 is a discount for this stock. Hmm, perhaps I will go out and be an investor now.

Moral of the story here. Wall St is full of lemmings. Lemmings on the way up, lemmings on the way down. Netflix is leveraging the social platform they have built that drives real sales and real performance. Yes, they made some missteps. But you can bet on the fact that they will continue to learn as they have done for the last 10 years and they will be bigger and better than ever!

The gift of google was that for the first time in history, the average person had access to everything.  Well at least in a virtual sense.  In all seriousness, it was Google’s focus on indexing all of the world’s information that really changed the game in the early part of the last decade.  The web evolved from Walled Gardens to being truly open and accessible in a way that it was not.

Before google, the aggregation sites were more of a pay to play.  They had limited access, and the user experience wasn’t that great.  I talked about this as one of the major themes for why we started this business here.  By about 2005, Vertical search services started to pop up that were including all of the content from the category, this was aggregation 2.0.  The primary advantage for Publishers in this model, and in the 1.0 model was that it was nearly 100% driven by the Aggregator, not the Publisher.

We are now entering into Aggregation 3.0.  This is where Aggregation and the Social Graph start to mingle.  All content for the vertical, intertwined with the biggest voices in a space (influencers) with the ability, no the necessity for the publisher to take a proactive position within each community.

This week, Scot Wingo from Channel Advisor did an interview with a PowerRetail.com on Fine Tuning your Channel Mix.  Here is what Scot had to say in relation to how retailers need to manage their comparison shopping engine campaigns:

The number one tactic is to expand to more comparison shopping engines (CSEs)—15 to 20 percent of our retailers’ sales are attributed to CSEs, and since some CSEs are experiencing a decline due to recent Google changes, you want to spread your products out across CSEs so that you aren’t too dependent on traffic from any one CSE.

More consumers are going online, spending more time engaging their friends, and pulling their offline experiences online.  As I look out at where the online retail industry is headed, shopping online will become more like shopping offline.  Consumers depend on feedback from their friends, and feedback from sales people and Retailers need to figure out how to take control of that feedback loop and be proactive, by taking the conversation to the user where the user is and not waiting for the user to get to their store.  This type of “social shopping” is what we are trying to solve for and we look forward to your feedback along the way!

 

The genesis of Omnea started with a simple request by a customer, “I want the Internet to tell me.”  Sounds simple enough, here’s the background.

The customer was looking for a black office chair.  She had been looking for a while and could see that chairs sold at one site used the exact same images as chairs sold on a different site but the names and prices were different.  To make matters worse, the price range of an office chair ranged anywhere from $50 to $2,500.  ”How do I know which one is best?” she asked.  My response was simple, “you call and ask us.”  That didn’t sit well with my customer, she wanted the Internet to tell her.

So, after several prototypes, a lot of research, a lot of conversations, and a lot of failures, we are getting ready to move from our beta “project” to a real site.  Over the next several weeks we will write about some of our experiences so far and ask for a lot of feedback and hopefully deliver a service that makes our users have a better online shopping experience.  Stop by and say hello once in a while and please let us know what your thoughts are.

In the meantime, here are a few pieces of information about our service.  We have over 1400 stores that have signed up.  Our search engine currently has over 12 million products.  There are over 1,000 beta users right now.  We hope you will join us, to sign up for our beta, please go here to sign up.