Bricks-N-Clicks vs. Bricks-N-Mortar

Online companies such as TaxiMagic and MusicJuice face different obstacles than traditional brick-and-mortar companies. Where there is tremendous opportunity with an online presence due to its unlimited geographic boundaries, lower infrastructure costs, lower barriers to entry and 24/7 sale operations, there are added obstacles that are not as apparent for brick-and-mortar companies.

Marketing is a huge challenge for these companies. Because the internet is so accessible these days and is unlimited in terms of geographic coverage, it is essential for online companies to have significant investment in marketing and to have a sizable marketing budget that will allow for these companies to not only get noticed, but to remain in the forefront of consumers minds. Directly related to that point, investment and execution of a sound SEO strategy is paramount to success for B2C online companies in order to navigate to consumers.

In addition to the marketing challenges, online companies face constant competitive pressure because anybody can essentially create a website today thanks to tools such as weebly, webs.com, wix.com, wordpress, etc. The barriers to entry have been all but eliminated to have a web presence. BUT, that doesn't mean all internet companies are going to be successful. Proper planning, execution and monetization strategies will guide a company's success.

An online presence opens up new doors for businesses, but the fundamentals of the business start-up and business planning processes still apply in order for any business to be successful.

Netflix - In Pursuit of VOD

Netflix was at a cross-roads during early 2007 which could severely impact the future direction of the company. The options presented in the case were as follows:

1 - Licensing agreement with cable providers to use the proprietary recommendation system

2 - Integrate streaming online video feature into the core offering

3 - Build a stand-alone online video business

My recommendation would be to pursue option 2 with an extension of the original idea. I would recommend that Netflix partners with a full-service media company such as Verizon to stream its video content through the multitude of Verizon's pipes. I would not look solely at online streaming. The future is going more and more mobile, so I think an integrated strategy that allows a user to log-in via mobile phone, tv, or internet is vital to this option. Users like to have choices and are more connected than ever before so it only makes sense to accommodate all of these options.

I think Netflix could offer some sort of tiered pricing structure such that users can take advantage of this opportunity and so Netflix can gain some additional revenue as well. I think a consumer that pays $10/month for "hard copies" of the DVDs would be more than willing to pay a couple more dollars a month to obtain the instant gratification of having the ability to order a movie and watch it, whenever they wanted.

All of this being said, whichever option Netflix chooses, the company needs to still place a significant focus on the movie selection for the inventory, that is key to their entire strategy. I am not a Netflix subscriber, but the one gripe I hear over and over is that the movie selection needs improvement.

Yelp Monetization & Fending Off Competition

As with many online, user-generated content websites, Yelp has encountered issues with monetization and establishing steady revenue streams. I think Yelp needs to think seriously about a freemium model to start gaining revenue from its users. They are the benefactors from the reviews so it only makes sense to charge them a small monthly/yearly fee to review the content. The biggest negative is the fact that these users have gotten used to this being a free service, so there will be some backlash from the consumers and that should be accounted for. For that reason, Yelp should adopt a freemium model that balances some free content with some premium content under it's paid subscription model.

Additionally, there are some necessary actions that the company should take immediately to fend off its competition (CitySearch, Yahoo Local, Google HotPot, etc) and to continue to differentiate itself. Some considerations include:

• Integration with social networks, namely Facebook and Twitter
• Added focus on national account sales, in addition to local advertisement sales
• Reconsider CPM advertising model vs CPC model
• Targeted marketing campaigns in major markets
• Increase local Community Manager presence to drive traffic and user reviews to the site

In mid-January 2011, Yelp just recently announced added functionality that allows users to "check in" at establishments to compete with the likes of FourSquare and Gowalla via its iPhone app, this is an excellent step in the right direction.