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Inside a Netflix Warehouse

chicagotribune.com

11–20 of 40 posts

Re: Inside a Netflix Warehouse

#11
The second thing I noticed was how, for a Web-based business, there were few computers -- maybe seven in the building,

Don't let that mislead you. Make no mistake about it, this is a highly automated business with a lot of thought, design, analysis, and most likely, very tightly-targeted software.

With all the talk here at hn about cool stuff like algorithms, scaling, UI design, CPM, etc., etc., etc., I still spend over 50% of my time helping customers move shit from Point A to Point B. That's it.

It may sound old school and boring, but it's anything but. When you're doing so much volume, every little thing matters. And lots of those little things can be dramtically affected by good systems. Here's where you have to get good or die trying. When the smallest mistake turns a 50 cent profit into a $100 loss, your systems must be on the razor's edge.

I bet the routing and error detection software in these warehouses is very sophisticated and handles outlying cases most people would never think of. Perhaps some journalist will take us on that trip with the next article :-)

Re: Inside a Netflix Warehouse

#12
The genius of their system is that most titles never ever get re-shelved because the software is smart enough to do the match-making.

""It's a lot faster than a traditional shelving system where you have to run around and marry up orders," says O'Handley. Dennys Torres, one of four original operators when the hub opened, in January 2002, can clock more than 800 discs per hour. The Scan Tomorrows move faster, set aside by the handful. Ship Discs get an envelope and a pair of stickers. "When we first started last year," says Torres, "moving 4 boxes was a lot." He indicates sets of long, narrow boxes filled with DVDs, some 320 discs in each. "We were taking long breaks, two-hour lunches. Now, it's all work; everybody moves at least 10 boxes a day."

From "90,000 DVDs. No Shelves." http://www.fastcompany.com/magazine/74/netflix.html

History of the Netflix Mailers: 1999 to 2005 (present version)

http://money.cnn.com/popups/2006/biz2/netflix/frameset.exclu...

Re: Inside a Netflix Warehouse

#14
post #11

The second thing I noticed was how, for a Web-based business, there were few computers -- maybe seven in the building, Don't let that mislead you. Make no mistake about it, this is a highly automated business with a lot of thought, design, analysis, and most likely, very tightly-targeted software. With all the talk here at hn about cool stuff like algorithms, scaling, UI design, CPM, etc., etc., etc., I still spend o…

Fat chance they'd let a programmer or systems designer anywhere near that place with a reporter :)

Re: Inside a Netflix Warehouse

#15
Interesting. I didn't expect Netflix to have a "fun" atmosphere like Zappos or anything, but it's funny to hear about a trendy web company with little, if any, character.

I wonder why the employees are required to wear the red Netflix t-shirts. It's not like they need to look presentable for customers or anything...

Re: Inside a Netflix Warehouse

#16

Surprisingly manual process - at least on the incoming side. I was interested to know how many discs are stored at one warehouse, but that is probably too specific for them to disseminate freely.

afaik, they try not to store popular items. otoh they do the opposite for the long tail titles. probably from ny times article, they also have changed their package format (both material and shape) 10 times or more.

Re: Inside a Netflix Warehouse

#17

Netflix has deployed the largest "legacy adapter layer" business process that I can recall. This is a great example of how to start a business where the end-state model is dependent on things outside of its scope of control (or even influence). When Netflix started in 1997, Most of its potential customers were using dial-up, and there was no way Hollywood would have allowed digital distribution anyway. So, they rode…

About marginal cost, it's not obvious to me that postage both ways plus sorting is more expensive than bandwidth plus royalties. Given that postage gets more expensive and bandwidth gets cheaper, streaming should be cheaper at some point if it isn't already.

Re: Inside a Netflix Warehouse

#19
post #17

Netflix has deployed the largest "legacy adapter layer" business process that I can recall. This is a great example of how to start a business where the end-state model is dependent on things outside of its scope of control (or even influence). When Netflix started in 1997, Most of its potential customers were using dial-up, and there was no way Hollywood would have allowed digital distribution anyway. So, they rode…

About marginal cost, it's not obvious to me that postage both ways plus sorting is more expensive than bandwidth plus royalties. Given that postage gets more expensive and bandwidth gets cheaper, streaming should be cheaper at some point if it isn't already.

> bandwidth plus royalties

I think I've read that Netflix has an agreement with the studios where they pay per shipment rather than per DVD. So, having 1000 of a new DVD on hand costs little more than having only a few. The studios like it because it aligns Netflix's cost structure with their own (basically fixed), so agency costs are minimized.

I'm sure that Netflix pays less for bandwidth than Amazon sells theirs for. So, we can presume streaming a two gig movie (probably much less in reality) would cost much less than 30 cents -- postage one way for a DVD. Add in a few more cents for data center, etc. and they're still better off relative to postage.

Re: Inside a Netflix Warehouse

#20
Am I reading this right? It seems to say that every day, every disc that’s currently is in stock is processed so that any that need to sent to customers can be pulled out for delivery. And my intuition tells me that would be crazy.

"Then discs are scanned a second time -- if a title is requested, and around 95 percent of titles get rented at least once every 90 days, the machine separates it and sorts it out by ZIP code. (The entire inventory of the building is run through this daily, a process that alerts other warehouses of the location of every one of the 89 million discs owned by Netflix.)"

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