New E-commerce business models

There are lots of amazing business models in the world. In ecommerce, subscription models are quickly gaining a foothold. Ecommerce marketers are investing in advanced personalization, enhanced marketing automation, educational content, and all the great aspects of inbound marketing. While all of these tools and tactics are key to empowering ecommerce marketers to help transform their businesses into inbound companies, there's one key, common characteristic that unites these tactics into the most valuable business model you can build.

Learning From Netflix

Netflix is a subscription based model where people can access thousands of movies either by mail-order DVDs or by streaming them online or to their various supported devices (including smart TVs, such as the one I have Battlestar Galactica playing in my ear as I type this). They've had their issues in the past, including service outages, alienating their core growth base of streaming users by trying to raise prices, as well as their infamous Qwikster debacle - but hey, no one's perfect. However, given all their shortcomings, they've recently recovered in spectacularly dramatic fashion. Their stock price is up over 600% from their low at the end of 2011, and they've recently passed rival HBO in terms of subscribers (source).

How was Netflix able to weather a storm that would have shredded other businesses? Their business model has the one key characteristic we should all try to emulate: Being their customer gets more valuable over time. Not because it gets any cheaper - that's one way that some companies use (particularly insurance companies whose prices are primarily based on risk assumption and who therefore lower prices over time for "safe drivers") - but because their service actually improves the more you use them.

At this point, I've rated over 700 movies and TV shows at Netflix. Although it's still not perfect, at this point their system knows me pretty well. Instead of saying "You like sci-fi, here's more sci-fi", Netflix is able to say "you like gritty, sci-fi war whistleblower movies that take place at night on alien planets featuring a strong female lead". With an inventory reaching into the thousands of options, Netflix is able to successfully help me make a decision about what I want to watch - and therein lies the key.