The Best Entertainment Era

Accompanied by a middle-aged man wearing FedEx overalls, Ronan, Mark Randolph and Jim Cook arrived at the FedEx cargo transfer station in San Jose, south of San Francisco Bay, California, in San Jose in the Santa Clara Valley .

Jim Cook is not the original boss of Netflix. He joined the company in 2000 and is currently the head of the warehousing and delivery department.

Sorry, Horst, Jim Cook said to the middle-aged man in FedEx overalls.

The middle-aged man named Horst said with a smile: You're welcome, we are old friends, and Netflix has been supporting FedEx's business.

Netflix uses FedEx's overnight delivery service, which has relatively high shipping costs and healthy profit margins.

Most importantly, he knew that Netflix might come out of the woods and that the business was on an upswing.

Horst brought three people to a working machine and introduced: This is the cargo roller sorter. Pick small goods and transport them to temporary storage stations for goods in different regions according to barcodes.

Ronan took a step forward and took a look. Behind the entrance of the processing machine was the most important high-speed roller belt for sorting.

Mark Randolph, who was following beside him, said deeply and seriously, This is simply a DVD killer.

Jim Cook also discovered the problem and couldn't help but said, Horst, have all the old equipment been revoked?

Yes. Horst didn't seem to hear Mark Randolph's words: The efficiency of the old equipment is too low, and the new high-speed drum sorter can increase the sorting efficiency by 30%.

Jim Cook endured what he said later. With so much improvement in efficiency, FedEx will never bring back old equipment because of Netflix, let alone use time-consuming and labor-intensive manual sorting.

Mark Randolph looked at Ronan, saw that Ronan hadn't spoken, and said to Jim Cook, Let's get started.

Jim Cook picked up a tray and dumped the DVDs in paper jackets onto a high-speed roller sorter, and as the drums turned, all the paper jackets moved forward.

Not long after, all the envelopes came to an end and fell into the lower tray, and a FedEx sorter quickly walked over.

The tray was quickly brought over,

Ronan, Mark Randolph, and Jim Cook picked up several envelopes to check, and two of the dozen or so envelopes were damaged.

Change a bag, said Mark Randolph. Go ahead.

Jim Cook took another prepared tray and dumped the jacket containing the DVD on the roller sorter. After it was returned, the jacket still had a break.

The packaging envelopes for each pallet cost almost the same, but differ in material and design.

Automatic sorting machines through barcodes have greatly improved the efficiency and error rate of logistics goods sorting, but for Netflix's usual postal business, it has caused a lot of inconvenience.

Since last year, the breakage rate of Netflix mailed DVDs has been high, and this is one of the main reasons.

FedEx is also actively assisting Netflix in resolving this situation in a responsible manner for customers.

Ronan has limited knowledge of logistics, and spends most of his time watching, rarely speaking.

Jim Cook took the trouble to dump more than a dozen trays of packaged DVDs into the sorting machine to observe the sorting situation.

Horst is very serious and responsible, and has been by Jim Cook's side.

Seeing that the others were far away, Ronan asked Mark Randolph in a low voice, Didn't you think of solving this before?

It's not that I haven't thought about it, but the conditions are temporarily not allowed. Mark Randolph said concisely: Since 2000, the company's main energy has been on raising funds, and Hastings and I have not paid enough attention to this matter. In addition , Cook negotiated with FedEx several times, trying to find a solution through on-site inspections, but all of them were rejected by FedEx.

He shook his head and said, In the second half of last year, we once cooperated with the post office, but the damage was similar.

Hearing this, Ronan had only one feeling that Netflix was not going well.

Mark Randolph continued: Until mid-December, FedEx suddenly agreed. He glanced at Horst: Netflix was acquired, and then the news of the group company's capital injection and share expansion just spread. ...

He didn't say any more, but Ronan understood the meaning behind it.

For FedEx, FedEx has the right to refuse Netflix’s previous request of right and wrong, but seeing that Netflix may usher in a period of rapid business development due to sufficient funds, FedEx also agreed to assist Netflix to solve the damage to the goods problem.

In fact, both parties are beyond reproach. Both Netflix and FedEx are commercial companies, and the choices they make are all based on their own benefits.

The damage rate of mailed goods can be said to be one of the key problems faced by Netflix. Ronan also listened to Mark Randolph’s detailed explanation. If the packaging is too thick, the first thing you will face is the increase in FedEx’s delivery costs, and secondly, the increase in packaging material costs. And other issues.

At present, the leasing business is already losing money. If the cost continues to increase, the loss may continue to rise.

Jim Cook's idea is to find a more ideal delivery solution while keeping the cost of shipping and packaging materials unchanged or even lowered.

To keep shipping costs down, the packaging Netflix used had to be cheap, light and durable.

Luo Nan's eyes are smeared with the logistics industry, except for mailing and receiving goods, he has no contact with other aspects at all.

The ability in this area is basically equal to zero, so naturally he will not make any suggestions.

Mark Randolph wasn't much better.

The appearance of the two people here is more to show that they attach great importance to this issue.

After dozens of repetitions, Jim Cook stopped, checked all the envelopes carefully, and chatted with Horst carefully for a while, and then found FedEx's professional sorters and pickers. asked.

Horst invited Ronan and Mark Randolph into the next office.

Knowing that the two of them couldn't help, Ronan went to the office and waited patiently, which lasted all morning.

Around noon, Jim Cook walked into the office.

How? asked Mark Randolph.

Ronan also looked over there. This is already a key issue restricting the development of Netflix, and he and Netflix simply do not have the strength to let FedEx change its business process.

If Netflix shipped tens of thousands of items every day, these would not be a problem at all.

After talking with Horst and two process employees, I found a feasible operating procedure. Jim Cook picked up the cup, drank the water in it, and said, This is a stupid way.

Horst did not follow up. There were only three people from Netflix. Jim Cook said directly: Whether it is the postal service, FedEx or other companies, we are temporarily unable to let them design a special process for Netflix. DVD mailing The business itself is very little, this kind of independent DVD mailing, and even only we at Netflix are doing it on a large scale.

Ronan supported the armrests of the chair with both hands, and he has fully realized that this is a matter of strength after all.

Small companies are underweight in front of big companies.

Jim Cook continued: So, for the time being, I can only deal with it in a dumb way. When we deliver the goods to FedEx, we put the mail into different pouches according to the FedEx sorting geographic standards, bypassing all automation. operating process, delivering them directly to the freight side.

Mark Randolph said a little helplessly: This is really a stupid way.

Ronan asked, Is there no way for FedEx or the postal service to provide more detailed sorting services?

There is no way. Jim Cook sighed: Our mail volume is too small.

But there is hope in his eyes: If our average daily shipment volume can increase to more than 20,000, then we only need to swing between the postal service and FedEx a little bit, and this problem can be solved.

Ronan was somewhat disappointed, but he also knew that even if Relativity Entertainment injected capital, it would be impossible for Netflix to become fat in one go, and said: Jim, you are a professional and directly responsible for this business. If you think it is feasible, let's do it for the time being. Bar.

He added: In 2002, our business will develop rapidly, and these problems will be resolved.

Mark Randolph pointed out the key: In the final analysis, our company's strength is insufficient.

Thanks to Horst, Ronan and the three left FedEx's logistics center in San Jose, looking for a place to have lunch together, and continue discussing the morning's affairs by the way.

Although Ronan knows the general development trend of Netflix and even understands many key business principles, he still faces many difficulties in order to make such a company bigger.

Logistics transportation should not only consider delivery to the customer, but also take into account the customer's return mail, because the customer places the order together with the postage fee, and then Netflix pays the courier company for the round-trip freight fee.

When customers return mail, the automatic sorting process cannot be avoided, so after repeated experiments all morning, Jim Cook chose the sleeve with the lowest damage rate. It is made of hard and light cardboard, and can hold up to three CDs at the same time. The sex goes through the automatic process of the drum sorter, basically without damage.

However, after the second sorting, individual envelopes began to be damaged.

Considering other problems such as wear and tear during transportation, the wear rate of secondary sorting in actual operation will be higher, and there is a greater possibility of damage to DVD discs.

These discs were not cheap enough for Ronan to buy a lot of pirated discs in his previous life. The wholesale price of Netflix’s goods was as high as 15 US dollars.

In addition, there are licensing fees for commercial operations.

As early as 1998, the Copyright Law had a digital copyright supplementary agreement. Any Internet operator conducting commercial operations on any video content, including short films, must pay a certain license fee to the producer or copyright owner.

There is no hard and fast fee, and licenses can be purchased as a one-time purchase or spread over each lease.

This is the same as the traditional video rental and sales industry.

For example, the cooperation between Hollywood companies and Blockbuster uses the method of selling DVDs and taking a cut from rentals.

However, the treatment of a behemoth like Blockbuster in Hollywood is not comparable to that of Netflix.