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Netflix, Inc. Message Board

  • judze_judy judze_judy May 10, 2005 12:48 PM Flag

    4500 mini DC's, LOL!!! BWAHAHA.........

    Hey bigDada401,

    What the heck is a mini DC. They mail out mini DVDs ??? Unless a DC has all the collection, it cannot be a DC.

    This is another attempt to dupe the investors on part of BBI.

    And.., NFLX keep increasing its sub base at furious pace.

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    • c_sempronius_gracchus c_sempronius_gracchus May 12, 2005 10:30 AM Flag

      "In my opinion Netflix should leave the �rural� dollar on the table for Blockbuster. One must remember the cost advantage of a large subscription base that is gained by focusing on locations with large populations. The larger the subscription base becomes the more consistent the average cost to service a customer. A business model focusing on the rural parts of the US would have a relatively volatile average cost to service a customer. The company with the steadier cost structure could offer a lower price while maintaining profitability. Overall, I see the mini-DC, or even large DC, in rural areas as too unpredictable to maintain profitability. Some battles should never be fought."

      I would tend to agree, especially in the case of Netflix, who would have to go through the process of evaluating rural markets, picking places for rural mini-DC's and getting relatively small return on the dollar. This musing was meant mostly for the Blockbuster side of things, or even the Movie Gallery side of things if they ever decided to get on the DVD-by-mail bandwagon, as each of them have stores that could be turned into in store distribution centers.

      Really, what the result in my mind of the mini-DC analysis is this:

      1) an in-store-DC is not as cost effective as a normal DC on a labor basis
      2) an in-store DC could possibly be more effective on an inventory basis (only pertains to Blockbuster)
      3) the only place that in-store-DCs seem to be viable are in population centers that wouldn't normally be targeted for a normal DC but have enough people that it might be worth to woo.

      Basically, this is not a place for Netflix to go, but it would be an option for Blockbuster/Movie Gallery if either of them decide that they want their own niche of the online DVD-by-mail biz.

    • "However, this doesn't mean that they should ignore the rural dollar..."

      "Now, throw this logic into the fray for the customer bases. Start competing for the rural population with the mini-DC for new releases, and you'll make some of these people very happy . It is a market that is currently not being tapped, and I don't think Netflix can get at it as easily as Blockbuster can. "

      In my opinion Netflix should leave the �rural� dollar on the table for Blockbuster. One must remember the cost advantage of a large subscription base that is gained by focusing on locations with large populations. The larger the subscription base becomes the more consistent the average cost to service a customer. A business model focusing on the rural parts of the US would have a relatively volatile average cost to service a customer. The company with the steadier cost structure could offer a lower price while maintaining profitability. Overall, I see the mini-DC, or even large DC, in rural areas as too unpredictable to maintain profitability. Some battles should never be fought.

    • Be careful when you argue with fools cause some people cant tell the difference.

    • yup, were reeeeally scared after all these rumors on stoping their online initiative, deep spending cuts, the 300 MILLION dividend, and offering BBI for sale.



      yup... we r shittin in out pants.


      nice try BBI_wins, u r going on ignore.


      ta ta ^^

    • Everyone says that if Icahn gets in, that Blockbuster will stop its online deal. I'm not quite sure I agree with that. Icahn is a very astute businessman, and if he sees possibility, he's going to keep going on it.

      I would actually be more scared with Icahn involved.

    • "The demographics suggest that the majority of customers are going to live in major metropolitan cities in the long-term. People living in major interconnected cities tend to adopt a new technology at a faster pace. Wal-Mart's retail strategy of servicing small towns worked wonders, but I doubt a DVD mail subscription service would."

      You are correct, by pure numbers, the largest demographic of your coverage is going to be in the metro areas.

      However, this doesn't mean that they should ignore the rural dollar. For instance, I live in the boonies, mostly. I used to live in Minneapolis and was very used to 1 day turnaround (put the envolope in the mail at 4pm, get an email that they received it the next morning at about 8am). Now I live about 2 hours out of the cities and I have a regular turnaround, which makes me much less enamored with the service. Why do I still do it? Well, cable has never really done it for me, so I just watch movies.

      Now, throw this logic into the fray for the customer bases. Start competing for the rural population with the mini-DC for new releases, and you'll make some of these people very happy . It is a market that is currently not being tapped, and I don't think Netflix can get at it as easily as Blockbuster can.

    • Generally, I would agree, it just takes longer for things to get to the country.

      However, I don't have any idea how much it would cost to convert a store to run a mini-DC type system, so it might be economically feasible to run it, on much less profit, and gain a significant service advantage when it comes to the less populated markets. Though you will not win the big markets this way, you will gain mindshare through the rural markets who are now dependent on mom and pop video stores (which tend to lack selection).

      All depends on how much it would cost.

    • Well, this was sort of where this whole thread started from. I was curious as to how they planned on doing it. The last time I looked at their technology it was woefully inadequate to handle in store distribution centers.

      I hadn't thought about the postage, that would probably suck hard.

      What is this Compass rollout that you speak of? Is this the system that they use to track stuff? Tell me more, tell me more.

    • "I think you are missing the point of the strategy. It is not meant to replace the DC entirely. In fact BBI is adding more DCs next year. They won't stop at 30."

      Oh, I'm not missing the point at all. Blockbuster will add distribution centers, Netflix will add distribution centers, and most likely they will be very close to each other. Neither company's distribution center seems to be more efficient than the other's, so that seems a moot point to me.

      "The mini-DC is meant to be a back up if the local DC is out of a particular copy. The concept allows BBI to invest less in DVD copies for the online business and justifies investing in more discs at the store. If they order too many discs for a store, the extra discs become available online. Store customers are more happy or online subs become more happy."

      I'm not sure if I totally beleive this is how it will work.

      Sure, the in-store distribution center will be used to back up the local distribution center, but I don't see that as being the big advantage of the system. I see big advantage in the system coming from the fact that you can open up some cheap in store distribution centers in areas that are not able to support a full sized distribution center and use that to send some of your new releases out to your customers in short order. Sure, they'll still have to wait a bit longer to get copies of low run titles, but most people won't get antsy about those.

    • ha

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