1.

What are Zappos core competencies and sources of

competitive advantage? How sustainable are they? What role
does corporate culture play in these questions?
Zappos core competencies are:
A> Consumer focused service to provide the wow factor to the customer.
Here, round the clock call centre facility, rapid delivery facility could be
cited as an example.
B> Trained employees who can understand the companys philosophy &
passionately deliver the task by themselves without engaging their
superiors for most of the occasions.
C> Superior supply chain was the competency they have built up.
D>User friendly informative website that aids the customer to make a well
informed purchase.
Sources of competitive advantage:
1.
2.
3.
4.
5.

Competent management team.

Strong company culture.
Financial stability.
Productive hiring &training policy.
First mover advantage in the market.

It is known fact that if the management of a company have a strong vision and
foresee the developments going to happen in the market and orient the
companys focus towards accepting those developments by nurturing its
competencies, then the subject company is bound to grow. Same was the case
for Zappos. Zappos management had imbibed a strong vision in its every aspect
of business be it customer handling, supply chain operation, creating a user
friendly web interface or building up trained

efficient work force. Here, we

should mention that the culture zappos management inculcated in its

organisation helped them to build a strong vision that reflected in the every
aspect of their business.

They understood the importance of upliftment of

competencies thats why they had invested continuously in the company to help
it to grow. Since Zippos was based on such sound fundamentals of business, it
ensured the sustainability of their competencies.

2.How important is next-day air shipment to the customer

experience? Is it worth the cost? How might you change it in the
cost-conscious environment facing the company in late 2008?
Next day air shipment was the add on service that the company was providing to
its customers. Customers were already impressed upon over their customer
centric services like call center service, helping nature of its employee, user

friendly website, rapid timely delivery.etc.Now this service increased their

expectation from the company which in turn created dissatisfied customer for
the company whenever company failed to deliver the item timely due to any
ground reality. Since, zappos relying on their customers for word of the mouth
promotion for their quality services to grow their business, any instance of
hurting consumer sentiments would be detrimental for their business growth.
This service also diminish the woo factor of their service because the consumer
knew that they would get the item next day whereas previously they got the
parcel next day surprisingly. In a sense, this add on feature of their service
hurting their business prospect to a extent rather they were gaining anything of
out of it.
Even from the cost point of view, they were experiencing significant expenses for
air shipment which not at all justify the feedback they were receiving from the
customers .In a sense, they were bleeding financially without gaining anything
extra out of their customer rather it somehow created frustrated consumers
which was not good for their business.
In the late 2008 when the recession period chips in, cost reduction became the
ulterior motive of the companies to stay afloat in the market. From my point of
view, Zappos should discard the idea of free next day delivery via air shipment
instead they should forge alliances with their logistic partners and chalk out
plans for ground shipments. Also, they should demark the areas where items can
be delivered in a days time. They might offer the next day delivery to the
customers of those areas and can charge an amount for it. Simultaneously they
should continue their practice of surprisingly one day delivery as promotional
activity not as a regular practice to keep the woo factor in their service.

3. How would you expand the business? Would you add more
products, more geographies, or by selling private labels? As you
expand the business, how can the company become more
profitable, particularly in light of the costs associated with the
focus on service?
There are three sides of concern while going for an expansion of Zappos
business- geographic expansion, more products or by selling private labels.

Geographic expansion: It is a little costly if we think of more geographies, its a

completely different culture in Europe. The customers there, are less likely to buy
online.
More products: Expansion by more products is a possible solution but at the
same time it is potentially harmful to brand equity.
Private labels: It is bit difficult way to expand the business as Zappos has no
expertise in shoes production, design, branding. And it is also face a lot of
problems while dealing with the suppliers.
As Zappos has very good knowledge on how to provide excellent customer
service they can think of selling that expertise and know-how. Many service
companies have serious problems with the quality of their services, and Zappos
can help with that.
They can also think of establishing a consultancy and a training centre for other
organizations and it will also yield high profit.

4.How would you expect the environment of a more costconscious consumer to affect Zappos business? What can Zappos
do in such an environment to maintain sales growth?
Zappos should look to serve the cost-conscious customers through 6pm and
overstock. It should not look to serve these customers through the existing
supply chain and guaranteed next day delivery as with those of the zappos
customers as it would only bring lesser margins and maybe losses.
Instead

they

should

look

to

focus

on

expanding

their

reach

of fulfilment centres (maybe smaller ones) to reach out to this segment of the
customers (which is not that small also). They can tie up with retailers where
these discounted goods can be sent off to and then further on distributed among
the end customers which would reduce the per delivery cost. Cost-conscious
customers primary concern is to get the best price for the product, for them all
other aspects (delivery time, newness of the product etc.) come much later and
zappos should try to use this to their advantage by making the supply chain
more cost effective rather than pure efficient. This will help them in maintaining
growth among this segment of customers too.