Chapter 333： Lots of questions

In San Jose, in the Santa Clara Valley, southern San Francisco Bay, California, Ronan, Mark Randolph and Jim Cook arrived at the FedEx cargo transfer station in San Jose, accompanied by a middle-aged man wearing FedEx work clothes. .

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

"Thank you, Horst." Jim Cook said to the middle-aged man in FedEx work clothes.

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

Netflix uses FedEx's overnight delivery service, with relatively high freight rates and substantial profit margins.

Most importantly, he knew that Netflix might be out of trouble, and the business had a period of upswing.

Horst took the three people to a machine that was working and introduced: “This is the cargo roller sorter, which is one of the new cargo handlers that FedEx began to deploy around the world in 2000. It is mainly used for sorting. Pick small goods and transport them to temporary storage stations leading to different areas according to the barcode."

Ronan stepped forward and took a look. Behind the entrance of the processor is the most important high-speed roller belt for sorting.

Mark Randolph, who followed him, was affectionate and serious, and said in a low voice: "This is simply a DVD killer."

Jim Cook also found the problem and couldn't help but said: "Horst, have all the old equipment been revoked?"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. The new high-speed roller sorter can increase the sorting efficiency by 30%."

Jim Cook endured his words later and improved so much efficiency. FedEx will definitely not bring back old equipment because of Netflix, let alone use time-consuming and labor-intensive manual sorting.

Mark Randolph looked at Ronan, saw Ronan not speaking, and said to Jim Cook, "Let's start."

Jim Cook picked up a tray and dumped the DVD discs in the paper envelopes onto the high-speed roller sorter. As the rollers turned, all the paper envelopes moved forward.

Before long, all the envelopes came to an end and fell into the tray on the lower side. A FedEx sorter quickly walked over.

The tray was quickly brought over. Ronan, Mark Randolph, and Jim Cook each picked up several envelopes and checked them. Two out of a dozen envelopes were damaged.

"Change a bag." Mark Randolph said, "Go on."

Jim Cook took another prepared tray and poured the jacket containing the DVD discs on the roller sorter. After recycling, the jacket still had a break.

The cost of packaging envelopes for each pallet is almost the same, with different materials and designs.

Machines that use barcodes for automatic sorting have greatly improved the efficiency and error rate of logistics goods sorting, but for Netflix's usual postal business, it has caused many inconveniences.

Since last year, the damage rate of DVDs sent by Netflix has remained high, which is a major reason.

With an attitude of being responsible for its customers, FedEx is also actively assisting Netflix in solving this situation.

Ronan has limited knowledge of logistics. He spends most of his time watching and rarely speaks.

Jim Cook took the trouble to dump the packaged DVD discs in a dozen trays into the sorter to observe the sorting situation.

Horst is very serious and responsible and has always been by Jim Cook.

Ronan saw that the others were far away, and asked Mark Randolph in a low voice, "Have you ever thought 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 to find a solution through field inspections, but FedEx refused all of them."

He shook his head and said, "We worked with the postal service in the second half of last year, but the damage was similar."

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

Mark Randolph continued: "Until mid-December, FedEx suddenly agreed." He glanced at Horst: "The news that Netflix was acquired and the group company injected capital and expanded shares just spread. ..."

He did not go on, but Ronan understood the meaning behind it.

For FedEx, FedEx had the right to ask for what is right and wrong in the past, and FedEx has the right to refuse it. However, seeing that Netflix may usher in a period of rapid business development because of sufficient funds, FedEx agreed to assist Netflix in solving the damage Problem.

In fact, both sides are blameless. Netflix and FedEx are both commercial companies, and the choices they make are all based on their own profits.

The damage rate of mailed goods can be said to be one of the key issues facing 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 shipping costs, and then 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 plan while keeping the freight and packaging material costs unchanged or even lower.

To reduce shipping costs, the packaging envelopes used by Netflix must be cheap, light and durable.

Ronan had a black eye on the logistics industry, and had never contacted anything other than mailing and receiving.

Ability in this area is basically equivalent to zero, so naturally I won't make any suggestions.

Mark Randolph is not much better.

The two appear here, more to show the attitude of attaching great importance to this issue.

After dozens of repetitions, Jim Cook stopped, first carefully inspected all the envelopes, and then chatted with Horst for a while, and then found the FedEx professional sorters and pickers, detailed Asked.

Horst invited Ronan and Mark Randolph into the nearby office.

Ronan knew that they couldn't help, so he went to the office and waited patiently. This wait was all morning.

Near noon, Jim Cook walked into the office.

"How is it?" Mark Randolph asked.

Ronan also looked over there. This is already a key issue restricting the development of Netflix, and he and Netflix did not have the strength to make FedEx change their business processes.

If Netflix ships tens of thousands of shipments every day, these are not problems at all.

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

Horst did not follow up. There were only three people from Netflix. Jim Cook said directly: "Whether the post, or FedEx or other companies, we are temporarily unable to let them design a special process for Netflix. DVD mailing The business itself is also very small. This kind of independent DVD mailing is even carried out by Netflix on a large scale."

Ronan supported the armrest of the chair with both hands, fully realizing that it was a question of strength after all.

Small companies do not have enough weight in front of large companies.

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

Mark Randolph said helplessly: "This is indeed a dumb way."

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

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

But his eyes were hopeful: "If our average daily shipment volume can be increased to more than 20,000, then only a slight swing between the Post and FedEx will solve this problem."

Ronan was somewhat disappointed, but he also knew that even if Relativity Entertainment injected capital, Netflix would not be able to eat fat all at once, and said: "Jim, you are a professional who is directly responsible for this business. If you think it is feasible, do it for now Right."

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

Mark Randolph pointed out the key: "After all, it is our company's lack of strength."

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

Although Ronan knows the general trend of Netflix's development and even knows many key operating principles, he still faces many difficulties if he wants to make such a company bigger.

Logistics and 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 with the mailing fee included, and then Netflix pays the courier company for the round-trip freight.

When the customer returns the mail, the automatic sorting process cannot be avoided, so after repeated experiments throughout the morning, Jim Cook chose the jacket with the lowest damage rate. It is made of hard and light cardboard and can hold up to three discs at a time. The performance is basically not damaged after the automatic process of the roller sorter.

But after the second sorting, individual envelopes began to appear damaged.

Taking into account that there are other problems such as wear during transportation The secondary sorting wear rate in actual operation will be higher, and there is a greater possibility of damage to DVD discs.

These discs were not as cheap as Ronan's previous life, and he bought a lot of pirated discs. Netflix's wholesale price was as high as $15.

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 must pay a certain license fee to the producer or copyright owner for commercial operations of any video content, including short films.

There are no hard and fast rules for the cost. You can buy a license at one time or you can allocate it to each lease.

This is the same as the traditional video rental industry.

For example, the Hollywood company and Blockbuster's cooperation adopted the method of selling DVDs and drawing a commission from the rental.

But the treatment of a behemoth like Blockbuster in Hollywood is not comparable to Netflix.