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The Secret Inner Workings of Netflix

The economy is stagnant and many businesses are struggling to stay afloat, yet Netflix consistently shows a profit. Well, what better way to temporarily take your mind off of job hunting and bill paying than to watch a movie? And if that movie is delivered right to your mailbox so that you don't even have to get dressed to retrieve it, that's just icing on the cake. But where exactly do those Netflix DVDs come from? How do they get to your home so quickly? These questions and more are answered below, but keep it quiet, please; the Netflix folks are very big on secrecy.

Netflix has 58 warehouses nationwide, and each one is non-descript and unremarkable. There is no outside signage or even a corporate color scheme to give the slightest hint to the rest of the industrial park what lurks inside those concrete walls.

The company has good reason to keep its presence on the down low: each warehouse contains not only millions of DVDs, but also some very sophisticated and expensive sorting and processing equipment. Aside for the theft potential, Netflix is also trying to avoid having customers showing up on their doorstep trying to return or rent discs.

netfUnmarked Netflix trucks are dispatched to the local main post office at 3:00AM six days per week to pick up cartons of returned DVDs. (Thus, getting your disc in the post early in the day doesn't mean you'll get your next movie any faster; there is only one pick-up per day.) The incoming cartons are handed off to employees who open each box and then spend their entire eight-hour shift taking a disc out of the box, removing it from the envelope, making sure that the title matches the sleeve, wiping it down in one motion and inspecting it for scratches or cracks, and then placing it in one of two bins (one for good discs, one for rejects). Seasoned employees perform this sequence about 650 times per hour, which makes them susceptible to repetitive stress injuries. As a precaution, there is a mandatory stretching/callisthenics break every 65 minutes. [Photo credit: Matthew J. Lee]

Discs that pass inspection are loaded into a machine that scans them (at the rate of 30,000 bar codes per hour) and generates an email confirmation to the sender that the disc has been received. The discs are then scanned a second time, during which process the system checks to see if the DVD has been requested and, if it has, it is automatically sorted by ZIP code. A separate machine inserts and seals the discs into envelopes and a laser printer zaps the address onto the front of the mailer. The machine stuffs and seals about 3,200 envelopes each hour, which are then packed into cartons. Come 5:00PM, the cartons are loaded into trucks and hauled back to the post office, completing that final curve in the Netflix circle.

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The Top Excuses Employees Give for Being Late to Work
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Expecting staff to just get out of bed and show up on time seems like a low bar for an employer to set, but some workers have trouble meeting this bare-minimum obligation. Their stated reasons can almost sound believable.

Job placement site CareerBuilder.com recently conducted a survey and asked 800 respondents in various age brackets how often they were late for work, as well as over 1000 human resource managers for data on missing workers. Overall, one in four employees admitted to being tardy at least once a month. Those aged 18 to 34 were the most frequently late, with 38 percent clocking in past their expected arrival. Only 14 percent of workers 45 and older were less-than-punctual.

As for excuses: 51 percent said traffic was the most common reason they straggled in. Around 31 percent said oversleeping was an issue, while bad weather (28 percent) and forgetting something and having to return home (13 percent) plagued others.

According to human resources managers, some workers claimed that they were late because their coffee was too hot; that they fell asleep in the parking lot; that it was too cold outside to travel; or that their false eyelashes were stuck together.

Not surprisingly, CareerBuilder also found that 88 percent of workers were in favor of a flexible work schedule.

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14 Secrets of Costco Employees
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Costco has become something of a unicorn in the brick-and-mortar industry. While employees at other chains express concerns over low wages and questionable management choices, the 200,000-plus ground troops at Costco’s massive shopping centers rave about generous pay ($13 to $22.50 hourly, depending on seniority), comprehensive benefits, and pension plans. After one year of employment, the turnover rate is only 6 percent, compared to an average of 16 percent across the retail industry. Not having to incur costs of training replacements is just one reason the company keeps prices low.

It’s no secret that Costco employees are a relatively happy bunch. But we wanted a little more information, so we’ve asked several current Costco workers about everything from pet peeves to nail polish bans to revoking memberships. (All requested we use only their first names to preserve anonymity.) Here’s what they had to tell us about life in the pallets.

1. WORKING THERE IS BETTER THAN GOING TO THE GYM.

Turns out that navigating a warehouse full of goods stacked to the ceiling is kind of like getting an all-day gym pass. “I walk about five to eight miles a day on average, and that's all within the confines of the store,” says Rachael, a Costco employee in Colorado. “When you see pallets stacked with 50-pound bags of flour or sugar or dog food or cat litter, a lot of that stuff had to be stacked by hand by employees before the store opens. Ditto for those giant stacks of shoes and bottles of salsa or five-gallon jugs of cooking oil. It's a lot of hard work.”

2. THEY CAN DO THEIR SHOPPING AFTER HOURS.

Costco shopping carts are arranged together
Brendan Smialowski, Getty Images

While employees typically don’t get shopping discounts, they have something that’s arguably better: the opportunity to shop in a near-empty store. “You can shop after hours, and a lot of employees do that,” says Kathleen, a Costco employee in Washington state. “You just bring your cart to the front register.” The store will keep the member service counter open so workers can check out after other registers have closed.

3. THE GENEROUS RETURN POLICY CAN GET MESSY.

Costco infamously places very few restrictions on returns. Most anything purchased there can be brought back for a refund as part of the company’s overall emphasis on exceptional customer service. Naturally, some members are willing to abuse the privilege. “Members return couches that are over five years old, and interestingly enough, they still have the receipt,” Rachael says. “My guess is that they buy that couch with the intention of returning it someday, so they tape the receipt to the bottom of the couch so they don't lose it. Then, when they've worn it out and want something new, they bring it back and get a full refund.”

Rachael has also seen a member return a freezer that was allegedly no longer working. The store refunded both the cost of the appliance and the spoiled meat inside. “The meat smelled like death,” she says.

4. THEY CAN ALSO TELL WHEN YOU’RE A SERIAL RETURNER.

A shopper at Costco looks at the computer display
Tim Boyle, Getty Images

Costco purchase records typically date back 10 years or so, but employees working the return counter don’t always need to reference your account to know that you're making a habit of getting refunds. “When someone comes in to return something without a receipt and they go, ‘Oh, you can look it up on my account,’ that’s a tell,” says Thomas, an employee in California. “It tells me you return so much stuff that you know what we can find on the computer.”

5. THERE’S A CONVENIENCE STORE-WITHIN-A-STORE.

While employees are generally allowed to eat their lunch or dinner meals in the food court, not all of them are crazy about pizza and hot dogs as part of their daily diet. Many opt for the employee break room, which—in some warehouse locations—looks more like a highway rest stop. Rows of vending machines offer fresh meals, snacks, and sodas, along with a complete kitchen for preparing food brought from home. “[It’s a] relatively new addition that is being implemented at more warehouses,” says Steve, an employee in California. “It's basically like a gas station's convenience store, with both frozen and fresh meals and snacks. The only difference is the prices are more reasonable.”

6. THERE’S A GOOD REASON THERE ISN’T AN EXPRESS CHECKOUT LANE.

A Costco shopper goes through the checkout lane
Joe Raedle, Getty Images

Walk into a Costco and you’ll probably notice an employee with a click counter taking inventory of incoming members. According to Rachael, that head count gets relayed to the supervisor in charge of opening registers. “They know that for a certain amount of people entering the store, within a certain amount of time, there should be a certain amount of registers open to accommodate those shoppers who are ready to check out,” she says. If there aren’t enough cashiers on hand, the supervisor can pull from other departments: Most employees are “cross-trained” to help out when areas are understaffed.

7. THERE’S A METHOD TO THE RECEIPT CHECK.

Customers sometimes feel offended when they’re met at the exit by an employee scanning their receipt, but it’s all in an effort to mitigate loss prevention and keep prices low. “We’re looking for items on the bottom of the cart, big items like TVs, or alcohol,” Thomas says. Typically, the value of these items might make it worth the risk for a customer who's trying to shoplift—and they're worth the double-check.

8. THEY TAKE SAFE FOOD HANDLING TO A NEW LEVEL ...

A Costco employee works in food preparation
Justin Sullivan, Getty Images

At Costco, employees are expected to exercise extreme caution when preparing and serving hot dogs, pizza, chicken and other food to members. “If an employee forgets to remove their apron before exiting the department, they must remove that apron, toss it into the hamper, and put on a fresh apron because now it's contaminated,” Rachael says. “Or, let's say a member asks for a slice of cheese pizza. We place that piece onto a plate, with tongs, of course, then place the plate onto the counter. If the member says, ‘Oh darn, I've changed my mind, I'd rather have pepperoni pizza,’ then we have to toss the pizza that they didn't want into the trash. Once it hits the counter, it can't come back.” Some store protocols even prohibit employees from wearing nail polish in food prep areas—it could chip and get into the food.

9. ... BUT WORKING AT THE FOOD COURT CAN PREPARE THEM FOR ANYTHING.

Costco employees who find themselves behind the counter at the chain’s food court say it's one of the few less-than-pleasant experiences of working there. For some members, the dynamic of waiting on food and peering over a service counter can make them forget their manners. “Usually members are rude when they are waiting on their pizza during a busy time,” Steve says. “If an employee can excel in the food court, any other position in the warehouse is pretty easy by comparison.”

10. THEY GET FREE TURKEYS.

Costco’s generous wages and benefits keep employment applications stacked high. What people don’t realize, Kathleen says, is that the company’s attention to employee satisfaction can result in getting gifted a giant bird. “We get free turkeys for Thanksgiving,” she says. “I didn’t even know that before I started working there. It’s a nice perk.”

11. THEY CAN REVOKE YOUR MEMBERSHIP.

Shoppers go down an aisle at Costco
Gabriel Buoys, AFP/Getty Images

But it’s got to be a pretty extreme situation. According to Thomas, memberships can be terminated if a member is caught stealing or having a physical altercation inside the store. For less severe infractions, employees can make notes under a “comments” section of your membership. They’ll do that for frequent returns, if you’re verbally aggressive, or if you like to rummage through pre-packaged produce looking for the best apples. (Don’t do that.)

12. MANAGERS GET THEIR HANDS DIRTY.

During peak business times on weekends and around holidays, the influx of customer traffic can get so formidable that managers jump in with employees to make sure everything gets taken care of. “Most people would be surprised if they realized that the person who just put all of their groceries into their cart at the registers or who helped load that huge mattress into their car was actually the store's general manager,” Rachael says.

13. EVERY DAILY STORE OPENING IS CONTROLLED CHAOS …

Shoppers appear in front of a Costco store
Scott Olsen, Getty Images

Like most any retail store, Costco prides itself on presenting a clean, efficient, and organized layout that holds little trace of the labor that went into overnight stocking or display preparation. But if a customer ever happened to see the store in the last hour before opening each day, they’d witness a flurry of activity. “It's controlled chaos with loud music along with the blaring of the forklift sirens,” Steve says. “Employees are rushing to finish and clean up, drivers are rushing to put merchandising in the steel [shelving], and the floor scrubber slowly but surely makes its way around the warehouse. It truly is a remarkable choreography that happens seven days a week.”

14. … AND EVERY CLOSING IS A SLOW MARCH.

To avoid stragglers, Costco employees form a line and walk down aisles to encourage customers to move toward the front of the store so they can check out before closing. Once the doors are locked, overnight stocking begins in anticipation of another day at the world’s coziest warehouse. “Our store has over 250 employees altogether,” Rachael says. “If all of us do our little bit, then it's a well-oiled machine that runs without a hitch.”

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