Hollywood Hunter

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For a chain store like Blockbuster that mainly operates video tape rentals, the most expensive part of the cost is the storage and logistics related costs of video tapes. A box of video tapes for rental may only cost $15, but the cost of warehousing and logistics during the operation cycle is as high as $50 to $60.

In order to speed up the turnover of video tapes among users as much as possible, thereby reducing the number of video tapes purchased and the pressure on warehousing and logistics, and in order to obtain more revenue, Blockbuster has implemented a late fee system.

The video tapes rented by users usually have a usage time of 7 days. If the usage time exceeds 7 days, they will start to pay late fees on a daily basis.

On the original timeline, Netflix repeatedly attacked Blockbuster because of the late payment fee system that this video chain store hated consumers. For this reason, it also fabricated a founder who paid $40 for a box of "Apollo 13". The late payment fee led to the creation of Netflix's story.

In fact, the story was completely fabricated, and Blockbuster even nearly sued Netflix for it. For Netflix, this has worked very well.

Because late payment fees are indeed a weakness of Blockbuster.

After becoming a shareholder and taking control of Blockbuster, Simon alerted Nancy Brill and Blockbuster management to the issue of late fees.

However, in the early stage of Blockbuster's development, late payment fees did play a very effective role. Therefore, this system has always been implemented.

However, with the increasingly fierce competition in the North American videotape industry, Blockbuster's late fee system has become increasingly out of date.

"In the past few months, I have done various types of experiments to cancel late payment fees in three cities on the east and west coasts. The results show that after the cancellation of late payment fees, the frequency of users leasing video tapes has increased significantly, and the revenue of chain stores has not decreased, but increased. of."

Blockbuster executives on the stage were still introducing Blockbuster Online. Offstage, Nancy Brill talked to Simon in a low voice.

Blockbuster's second-quarter financial report has not yet been released, but Simon knows that in the first quarter of 1992, of Blockbuster's overall $730 million in revenue, $61 million of its revenue came from late fees. This part Revenue is 8% of total revenue.

In my memory, Blockbuster's late fee income exceeded 10% of its total revenue. Such a "rich" income was almost equal to Blockbuster's annual net profit. Before going bankrupt, the video-tape chain giant failed to completely eliminate late fees.

Even people who don't know how to run a company can probably understand that a company that relies on fines to support its revenue is definitely abnormal.

Blockbuster can of course understand this, but the company on the original timeline is too big to be lost, and at the same time it lacks a strong shareholder, which eventually led to hesitant to move forward on many strategies that should be changed, and not only failed to give up completely from beginning to end. The late fee system is actually full of negative effects on enterprises. Under the general trend of physical leasing to online leasing, Blockbuster made a big reversal and completely cut off the online leasing business that had already been established, which eventually led to The world's largest video chain company vanished into thin air.

Simon thought about this and asked Nancy, "Have you discussed this on the Blockbuster board?"

Nancy nodded and said: "Many people have concerns, and there is also the issue of franchised stores. Self-operated stores are nothing, and franchised stores are likely to be more reluctant to give up late fees. We can't expect these franchisees to have too long. eyes."

About 20% of Blockbuster's more than 4,300 chain stores are franchise chains.

This ratio is also much lower than the Blockbuster in Simon's memory.

After taking full control of Blockbuster, with Simon's support, a very important move made by the management was to gradually cancel the franchise system and only develop self-operated stores. on the original timeline.

However, Blockbuster cannot immediately cancel the franchise of the franchised chain stores.

Moreover, these franchised stores have a much higher degree of freedom of operation than self-operated stores.

For example, the late payment fee, Blockbuster head office made a decision to cancel the late payment fee, and these franchised stores do not have to comply absolutely.

"If you can guarantee that your experimental data is ok, then go ahead and implement it," Simon considered for a moment, and said, "I will help you on the side of the board of directors and shareholders, and you need to solve it yourself for the franchise store. However, I suggest that you better not do it overnight, and carefully consider a reasonable plan."

Nancy nodded and said, "I plan to use this opportunity to further expand Blockbuster's membership system. In addition, I hope to distinguish Blockbuster's franchised stores from self-operated stores, such as conspicuous presence in franchised stores. Add the 'franchise' label to the location to distinguish it from self-operated stores. After all, this time Blockbuster Online, franchise stores are also not involved."

Blockbuster's online plan is gradually integrated with Blockbuster's physical stores. If franchised stores are also included in this system, there will inevitably be problems in the distribution of benefits.

"So, if you do this, how do you deal with the dissatisfaction of the franchise stores?"

"I intend to give them a higher degree of operational freedom, while appropriately reducing the franchise fee."

Simon smiled and said, "Do you want to strip out these stores directly?"

There was a bit of helplessness on Nancy's delicate and small face: "Yeah, it's a pity it's too difficult."

Stripping off franchise stores is like canceling late payment fees, which means giving up a large amount of market share and the company's receivables, which must seriously impact Blockbuster's stock price.

The two had been whispering and discussing Blockbuster's cancellation of late fees throughout the press conference, and at the reception when they knew that the press conference was over, Nancy had also been by Simon's side and kept chatting about various issues.

Nancy's "entanglement" inevitably made the female assistant who came with Simon to have some instinctive vigilance. The look of wanting to follow Simon step by step but worrying about being rejected, even Nancy saw it.

In the end, Simon simply sent the female assistant to chat with the C-girl Claire who also came here today, and then looked at Nancy with a playful expression: "Is it fun to do this?"

Nancy raised her face, with a mischievous smile on the corner of her mouth: "It's very interesting."

"Be careful that Jenny wears small shoes for you in the future. You know, men have soft ears. She speaks ill of you a few times in front of me, and maybe you will lose your job."

Nancy said, "Are you the type of person who is easily influenced by women?"

Simon nodded seriously and said, "Yes, the more beautiful a woman is, the more I can't control it."

Nancy choked, then rolled her eyes and said, "So, I'm pretty sure Jenny wouldn't do that."

"why?"

"Since you know that you are easily influenced by women, you will definitely not choose to be around a woman who likes to influence and manipulate you."

Simon thought for a moment, took a sip of the red wine, and said, "It seems to make sense."

Nancy took another step forward, as if planning to make persistent efforts: "So, I guess, you are actually wary of women?"

Simon lowered his head and looked at the small executive in front of him, ignoring what she just said, but said, "You have broken through the comfortable distance between me and people."

"Are you feeling unwell?"

"No," Simon's tone turned dangerous, and he said faintly, "You made me want to hunt."

Nancy and Simon looked at each other, but in less than a second, they stepped back a little.

The housekeeper just happened to come over to say hello, which can be regarded as breaking the little embarrassment that had just brewed.

"What are you talking about?"

"Blockbuster's late payment fee."

Simon said, admiring Alice's capable and beautiful appearance in a white professional suit without shyness.

After the last night, although they met several times, the two never found a chance to get close.

On the one hand, Simon is indeed a relatively restrained person. On the other hand, there are not many women around, but he can basically keep him under control. For example, when she came to San Francisco, the female assistant would not give Simon any chance to steal food. If Janet was in Los Angeles, Simon rarely stayed home.

Simon's eyes fell on him, and Alice inexplicably remembered the situation when the man touched him with a big hand and a little rudely that night. She couldn't help but feel a little uncomfortable, so she turned her attention to Nancy and said, "Speaking of which, Nan Xi, have you considered what I said to you?"

Nancy turned her eyes between Simon and Alice, nodded, and said, "I have considered it, but although I also think this is feasible, if we do, we will face a class action lawsuit from shareholders. already."

Simon stood by the side, listening to the two women say this, and asked, "Is there anything I don't know?"

Nancy glanced at Simon and said, "Alice wants Blockbuster to cancel the videotape sales business online."

Simon understood immediately.

The development of Amazon's online store in the past six months can be described as rapid. Therefore, in addition to books, it is also an example to increase the variety of goods. In addition to books, the most suitable type of online sales at this stage, video tapes must be included.

The housekeeper presumably wants Blockbuster Online to cancel its videotape sales to avoid competing with Amazon's planned business. Of course, there should be a corresponding exchange of interests, and it is impossible for Amazon to let Blockbuster cancel this part of the business.

Although Blockbuster's business focus is on video tape rental, it has always been involved in video tape retailing.

Simon looked at Nancy and asked, "What do you think?"

"I think this is a good suggestion," Nancy said honestly: "Canceling online retail, Blockbuster and Amazon can cooperate in promoting each other to guide the user base, and Blockbuster can also reduce a large part of the retail business expenses. "Actually, Simon, I even want to cancel the retail business of the brick-and-mortar chain so that Blockbuster can focus more on leasing. It just doesn't work."

The late fee may only account for 8% of Blockbuster's revenue, but the videotape retail sales account for more than 20% of Blockbuster's total revenue, which is indeed impossible to cut.

As for Blockbuster Online, the site has just opened, and the future of online retailing is technically uncertain, and cancellation doesn't seem to matter.

However, if this is really done, other Blockbuster shareholders will definitely be dissatisfied. For the interests of another company in the Westeros system, the interests of Blockbuster shareholders are harmed, which is unreasonable. As a result, other Blockbuster shareholders are likely to file a class action lawsuit at that time.

Running a company, especially such a public company, often fails to make the most correct decisions, and that's the key.

In the final analysis, it was because Simon failed to completely buy Blockbuster.

If a 100% shareholding is achieved, then, of course, the boss can do whatever he wants.

what to do.

Nancy quickly added: "However, in addition to canceling the late fee, I have recently considered cutting off some of Blockbuster's corner businesses such as movie peripheral sales."

Simon smiled and said, "This part of the business was originally proposed by you."

"Yeah," Nancy said without denying, "However, after recalculating the cost and return ratio of this part of the business in recent quarters, I think it's better to cut it off and return to the core videotape retailing. It can save a large part of human resources, and it is also more convenient for Blockbuster's management and further expansion."

After Nancy finished speaking, she also glanced at Simon with great interest, and there was even a hint of whether you wanted to beg me in her eyes. Blockbuster's peripheral product retailing mainly sells film and television peripheral products related to Daenerys Entertainment.

Simon wanted to pinch Nancy's delicate face: Hey, do you remember who your boss is?

Of course it's impossible to do this at a party in full view.

But Nancy realized something, instinctively shrank her neck, and then looked over, not to be outdone.

Of course, Simon would not really do such abrupt things, saying: "As long as you think it is appropriate to make a decision, you can do it. However, Nancy, the consequences of the matter also need to be borne by you. Also, don't forget, You're more of the group president of Daenerys Entertainment's consumer products business."

Nancy paused, completely dispelling some of the careful thoughts just now, and said solemnly, "I will consider this matter very seriously."

The little senior executive also suddenly understood.

Peripheral product sales, for Blockbuster, the ratio of investment and return may not be too high, and it will also increase the manpower, procurement and logistics costs of chain stores. However, this can greatly increase Daenerys Entertainment's peripheral product revenue.

Blockbuster's profit margins on peripheral product sales may be very low, but Daenerys Entertainment's income is very high.

Nancy has focused too much on Blockbuster in recent months, and has inevitably neglected her own job. In fact, she just mentioned this matter, and it was just an immature idea after analyzing Blockbuster's financial reports in recent quarters.

If she thought about it carefully, she would definitely not rashly propose it.

Women are always easy to express their anger, and under the slight embarrassment, Nancy felt that it must be the guy in front of her who made her feel some confrontational emotions.

Yes, definitely so.

Apparently he was right.

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