July 08, 2010

Blockbuster: A Multichannel Business

For the past decade, we've been taught how critically important it is to be "multi-channel".

Intuitively, the concept makes perfect sense. Maybe I want to rent a movie. Theoretically, it makes logical sense that I'd drive four minutes to my local Blockbuster store to pick up a copy of, say, "Idiocracy", because I want to see the movie now, not in two days when Netflix delivers it to my home.

Go visit the Multichannel Merchant website, and browse the hundreds of articles that have been written about Blockbuster multichannel strategy over the past decade. You'll be riveted by the strategic choices that Blockbuster made, choices that any pundit would laud:
That's a lot of multi-channel strategy ... bricks 'n clicks and promos and CRM and co-branding and channels and freebies and segmentation and even loyalty programs. And yet, last week, Blockbuster was delisted, as the brand struggles to make interest payments on more than $900,000,000 in crippling debt.

Be honest with yourself, especially if you promote multichannel strategies:
  • Why do you choose Netflix over Blockbuster?
  • Why do you choose Amazon over Barnes & Noble or Borders?
  • Why do you choose Zappos over Nordstrom?
If you can answer those questions, you've solved a marketing riddle that escaped the multichannel generation of business leaders.

(Hint #1: A good part of answering the riddle involves prudent financial management of a business. It doesn't matter if a customer can order a movie and return it in a store if a business chews up half of all profit dollars or more on interest payments, does it?).

(Hint #2: Focus on merchandise and service and product delivery before you focus on channels and CRM and loyalty programs and promotions and co-branding ... maybe that is the true answer to the marketing riddle of why multichannel marketing doesn't work).