Netflix Taps Into E-Commerce To Keep Up With Advertising Demands

Netflix is the number one top-rated streaming platform in the world, now wielding more than 200 million global subscribers. With the pandemic increasing the popularity of online streaming, revenue levels have maintained consistent growth but have also increased the competition amongst platforms.  

Netflix reported having a 24% growth in revenue in their 2021 Q1 reporting but saw a huge decline in their subscriber growth in comparison to the previous year. The streaming giant told shareholders that they believed it was due to the COVID-19 delayed production rates, which resulted in a lighter content slate for the first half of this year. Netflix said they didn’t think the decline was due to competitor intensity since most of the rival platforms were experiencing the same issues. 


Courtesy of Netflix.shop
Courtesy of Netflix.shop

Following the declining subscriber growth, Netflix announced in June that they are releasing Netflix.shop, an online store that sells their branded merchandise. The store is currently available in the US and UK. The debut collection includes apparel from hit series “Squid Game”, anime-inspired collectibles with products based on “Stranger Things” and “The Witcher”, and even a branded streetwear collaboration with the Tokyo fashion company BEAMS. 

Additional sources of revenue like Netflix.shop could help the company push back investor demand to bring advertising to its platform. Netflix has stood a strong stance against advertising in the past, since competing with Google, Facebook, and Amazon in the advertising market would be expensive and business demanding. As an alternative, its e-commerce offering could create a new revenue stream for advertising without the costs and demands associated with establishing an ad business. The offering will also give the company a stronger competitive edge against rival platforms such as Disney+, HBO Max, and Amazon Prime Video. 

Netflix teams up with Walmart 

The e-commerce initiative didn’t stop with Netflix.shop. This month, Netflix has taken its e-commerce offering to the next level by announcing a partnership with national retailer Walmart. This is Netflix’s first digital storefront with a national retailer and can play well in the company’s efforts to expand its market share.

Courtesy of Walmart
    Courtesy of Walmart

For Walmart, the new merchandise hub presents an opportunity to better tap into consumer culture. This has been an increasingly important and demanding mandate for e-commerce brands trying to stay on top of trends in the fast-moving social media age. The Netflix Hub at Walmart offers exclusive merchandise for shows such as the hit series “Squid Game”. This planned offering is indicative of this mindset.

The new merchandise hub sits at the intersection of e-commerce and fan culture, which can potentially be a great benefactor for both sides. The pandemic benefited both the growth of online shopping habits and streaming figures, so putting two-in-two together may be a match made in heaven. The two companies are also planning on angling to drive continued engagement by including interactive user experiences like the Fan Select tool, which lets visitors vote on merchandise they’d like to see from their favorite shows. 

With the launch rolling out in time for the critical fourth-quarter holiday window, the spike in business traffic may pose more problems for Walmart’s inventory levels. Many retailers, including Walmart, have been facing intense supply-chain pressures, inflation, and labor shortages as a result of the pandemic. However, Walmart has been making an ongoing effort to resolve these issues and explained that they are working with suppliers to source holiday merchandise earlier than usual and have been highly focused on inventory levels since the start of the pandemic.

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