Netflix

Netflix needs to offer a wider selection for online streaming, However, this is a challenge because the movie studios do not want to cooperate with Netflix because online streaming would impact their revenue on DVD sales and digital downloads. The article below suggests that movie studios like Time Warner intend to make it more expensive for movie renters like Netflix to stream content, in addition to extending the amount of time before a movie is available on DVD.

http://articles.latimes.com/2011/feb/03/business/la-fi-ct-time-warner-20110203 

despite this challenge, the market is shifting away from DVD renting towards streaming. Netflix needs to offer its customers the same, varied selection but with the new convenience of streaming. if it is going to cost Netflix more money to acquire the rights to stream newer releases, it could subsidize the cost by selling advertising space similar to what Hulu offers.

Yelp needs help!

What do you think is the best way for Yelp to monetize the reviews and content they’ve generated, going forward? How scared should Yelp be of Google Hotpot and what should they do to maintain/grow their position?

Yelp is in a tough position. Its current model of charging for advertisements and sponsorships is not producing sustainable levels of revenue. Regardless of advertisements/sponsorships, users are going to review businesses based on their experiences, which could be good or bad, and businesses could in effect be paying for negative publicity. At the same time, Yelp's success depends on the quantity and quality of its user reviews, as well as the number of people that view their site for recommendations; for this reason, it can not afford to alienate its users by charging them excessive amounts to use the site

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While some businesses gain value (increased sales) out of Yelp, it seems to be the site's viewers and reviewers that gain the most out of the site; for this reason, Yelp should utilize a freemium strategy that charges a nominal subscriber fee after a certain amount of usage. For example, casual viewers can click through Yelp's site 15 times before they will be required to subscribe to Yelp, costing them a nominal charge of $2/month. In order to write a review or comment on a post, you have to subscribe. With 20 million visitors to the site in 2008, Yelp would only need a small percentage to subscribe in order to generate high levels of revenue.

I don't think that Yelp's community will be turned off by this nominal charge because they seem to get a wide range of returns from yelping. Some see it as a release, some seek acceptance, some value personal recommendations and write thoughtful reviews in the hopes of reading the same thoughtfulness in return. The case remarks that most Yelpers don't do drive by reviews; they are invested in the site because it provides them a sense of community. The casual Yelp visitor will not be willing to pay even $24/year to view the site, though the regular Yelper is already committed to the site and should buy in.  

I do think that Yelp should be worried about Google Hotpot because right now, Yelp's site simply aggregates information (maps, phone numbers, price range, reviews, etc) that could be available or replicated at several different sites. Yelp needs to offer a higher standard of reviews that would be harder to replicate by Google. Yelp has already created an upper echelon of Yelpers through its Elite Squad, but it can further encourage thoughtful and constructive reviews by offering coupons or other incentives to its subscribers. Users can already comment and "like" other posts, and Yelp can use this peer review to identify the users that are helping improve the credibility of their site and adequately reward them. This will help Yelp improve loyalty and retention (especially in the wake of competition from Google) and it will create incentives for Yelpers to write thoughtful responses that help build the site's reputation.  

Webvan

Why do you think Webvan failed so spectacularly?


Webvan failed because it over-relied on technology and automation. As I was reading the case, I questioned whether its technology was an asset or a liability because it was extremely expensive to maintain and wasn't generating enough value--Webvan couldn't even break even in its flagship store. Even though it was later acquired by Webvan, a less automated Homegrocer.com had been able to expand quickly at lower cost. Rather than depend on automation/technology, Homegrocer invested in its people, allowing it to set up facilities that cost 25% less than Webvan. Despite its reliance and investment in automated technology, Webvan could only fill about 35% of the order using its automated pods. With a large number of perishable goods and heavier items requiring labor intensive picking per order, an automated system was not creating enough value for Webvan. 


Since many online grocers struggled during this time, it seems to imply that the customers did not perceive a benefit from the online business model. Webvan assumed that it could create a more efficient model that offered convenience to its customers, though I'm not sure its customers found it valuable to order commodities over the internet, wait 24 hours to receive them, and schedule a 30 minute window for delivery. The online business model has been more successful for companies like Zappos and Amazon because they're not selling commodities (or perishable goods, complicating the storage/delivery process) and instead they're making it easy and convenient for customers to purchase hard-to-find items.