Evolution of an Envelope
The key to Netflix's $687 million operation is its lightweight, versatile mailer. Here's how it has changed over the years, and why.
By G. Pascal Zachary

(Business 2.0) – 1999 Made from cardboard, the first Netflix mailer weighs more than an ounce. But with only 100,000 customers, reducing material and shipping costs is not yet a priority for the company.

2000 Thick paper replaces cardboard. DVDs are inserted and removed from the top rather than the side. Full-color printing is introduced. Top-loading is abandoned in favor of side-loading, which is judged more convenient. Customers are asked to peel off a sticker to reveal Netflix's return address. The design is eventually deemed too complex. Made from plastic instead of paper, this mailer is cheaper, but it sometimes inflates when transported on airplanes.

2001 An airhole (the black dot on the left side of the mailer) is added to prevent the package from inflating. Netflix returns to paper because it's easier to recycle. Foam padding is added to reduce breakage. Foam padding is dropped because the benefits don't justify the cost. The company gives top-loading another try. Marking a return to side-loading, this mailer is a direct ancestor of the one the company uses today.

2003 Instead of sealing the entire top and bottom, Netflix introduces a circular sticker, affixed only on the top.

2004 For the first time, the company uses the mailer to promote the release of a DVD--Shrek 2. A window shows the disc bar code. Speculation is that this enables storing discs in mailers prior to shipping.

2005 The current mailer--introduced in early 2005--adds a bar code at the bottom of the envelope. (Netflix says the additional label is part of its "secret sauce" but won't elaborate.) The result of more than five years of experimentation, this mailer transports approximately 1.4 million DVDs a day to Netflix's 4.2 million subscribers.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.