Jeet Approved &Random Opinions &Rants/Ravings ranjeet on 27 Dec 2007 01:24 am
Business Sense
First of all, I’m no business man. I’ve got no MBA degree, I’m just a humble engineer. I don’t know how to, say, take risky mortgages and package them all together into an amorphous mass that, while easier to disguise and thus sell, ends up severing the relationship between homeowner and bank. And I probably wouldn’t think of slicing parts of my company out into thousands of pieces, giving those pieces assets, getting banks to give those “special purpose entities” low interest loans based on those assets, and then getting the S.P.E.’s to lend that money to my main corporation to raise money without appearing to be in debt. I’m just not that smart.
But still, it pains me to see companies doing stupid things. For instance, I recently decided to start doing the online rental thing. I liked Netflix‘s independent nature, but the first DVD they sent me on my free trial was the wrong one — bad move. I closed my free trial and moved to Blockbuster, because frankly, it was a better value. The plans were the same price, but in addition to having one DVD out a time, I could have unlimited exchanges; I could get a DVD in the mail, watch it, then go to a brick-and-mortar Blockbuster and exchange it for another movie. They would record my mailed DVD as returned, so I would get the next one faster, and I would have a movie to watch tonight. However, my intuition was correct — it was such a fantastic value, that Blockbuster was forced to change their pricing about a month after I signed up, a decision that was met with much outcry. Outcry that was unnecessary, I thought, since you were getting more for your money with the exchanges. Oh, Netflix had the “Watch Now!” thing going, with online viewing to supplement your account, but the selection of things to watch online was uninspiring to say the least. It was clear that Blockbuster was trying to crush Netflix into the ground by outspending them, but in response Netflix merely lowered prices, not once but twice. To top it off, they pledged to improve customer service by employing more real-live people and giving them the power to make the customers happy. After the latest price increase announcement by Blockbuster, I decided to let Netflix take me back (perhaps not-so-coincidentally, the day after I got the price increase e-mail from Blockbuster, I received a please-come-back letter from Netflix with an offer for free popcorn), and I have to say, I’m impressed with the current service. The Watch Now section has selections that I had in my queue, like seasons one of Heroes and 30 Rock and Red Dwarf, along with some classics. And their response time for receiving movies has been eerily fast — I dropped a DVD in a mailbox on Saturday after the last posted pickup time, and Netflix notified me on Sunday night that they had received my DVD and were sending the next one. Just creepy, man. It just seems clear to me that Netflix obviously has a much more efficient process, but rather than Blockbuster trying to improve their processes, they’re just gonna jack up prices and work hard to piss people off, and hope that Netflix fails. Ah well. At the moment, I will say Netflix has impressed me enough to be :
Which brings me to the last item of note….read about this recently. The summary of the summary is that Circuit City came up with the brilliant idea to save money by firing all their most well-paid salespeople (i.e. senior staff who actually knew what they were talking about or at least knew how to sell stuff), and hiring more entry level people who cost less. The result : a 75% drop in the share price, as sales have plummeted. But don’t worry, folks; the genius executive vice-presidents who approved this idea got $1 million retention bonuses to make sure they don’t leave, as I’m sure they are highly pursued by other companies. Seriously, the only reasons you should go to a brick-and-mortar store are if
- You need the product right away
- You need to see/hold the product before buying it
- You have gift cards
- The store had some expertise that could come to bear on your buying decision
That’s just about it. You shouldn’t go because of price, because it is very rare that you can’t find a cheaper price online, unless shipping is prohibitively expensive, but even then it’s usually offset by a lack of sales tax. So, basically, Circuit City took away one of the only reasons that a person would shop there — to talk to a knowledgeable person who knows what they’re talking about. Or at least a slick salesperson who makes them feel good about making the purchase. But at least they saved all that money so they could give it to their executives. I guess it doesn’t make sense to me — but hey, I’m no businessman.