ZAPPOS

SUMMARY
The case discusses the growth of Zappos.com (Zappos) into a major online shoe company, with particular focus on the steps the company took to integrate customer service into its culture. It also details the various initiatives which Zappos took to improve its customer service. The case also describes Zappos use of employeegenerated media and social media to increase brand awareness and customer advocacy. The case ends with a discussion on some of the challenges facing the company, as the economic situation in the United States deteriorates

Strategy not spend much in marketing, create customer experience and ensure
WOM because of satisfied customers

Have built dot com model with great supply chain and retail policy

In 2009 market leader in online shoe sales in US

About Zappos
Founded in 1999, at a time when there were few online shoe retailers. Company grew over the years, mainly by offering several customer-friendly services such as free shipping and a generous return policy. Offered at considerable ctc. Co. Ensured that customer service was ingrained in the companys culture

If products of Zappos not available they give competitors website ---- customer service at its best Efforts - Other cos. Marketing ---- Zappos customer service

Blogs like Twitter to reach out to customer

2003 Diversification
Started selling handbags, wrist watches and apparels

From 99-08 fastest growing online retailers in the world.

Sales
99 Nil 08 US $ 1 bil

Lay off 125 employees in 08 recession

Emergence of Zappos
Refer pg 3 & 4 case study

Problems faced because of online

Customers tend to avoid buying online shoes because of fitting concerns It would take them a long time to build a reputation, attract shoe manufacturers, secure inventory, and build up a large selection

Why Zappos
Wanted to build brand around customer services and not just shoes Wanted Zappos = absolute best service

Some services offered

Zappos offered free shipping and allowed the customers to return the shoes if they were not satisfied with their purchases for any reason. In such cases, the return shipping expenses were borne by the company. Moreover, Zappos credited the customers accounts while the returned goods were still in transit

365 days return policy. Promise to deliver the product in 4-5 working days but give them in 1 day only

Promised 110% return in the difference in the pricing between zappos and competitors

According to Heish all the cost for providing services is a long term investment rather then an expense

Initially offered discounts and e coupons but dropped it as it is for one time price conscious buyers and not brand loyal ones

Competing with brick and mortar retailers, idea is by offering services they are trying to bridge the gap between online and store

24/7 toll free number. First in online retail industry Customer service team to answer every email queries No limit on duration of calls for customer service Dont think of how quickly customer keeps the phone

Acc. to Hsieh services like free shipping and free returns could be imitated but culture cannot be imitated n it can be a major competitive advantage Hsieh listed 10 core values to be adopted for building a customer servicefocused culture at Zappos (See Table I for the 10 core values).

1 Deliver WOW through service. 2 Embrace and drive change. 3 Create fun and a little weirdness. 4 Be adventurous, creative, and open-minded. 5 Pursue growth and learning. 6 Build open and honest relationships with communication. 7 Build a positive team and family spirit. 8 Do more with less. 9 Be passionate and determined. 10 Be humble.

HR
At Zappos they hire & fire if employees not living up to the expectations of culture All new hires have to spend 5 weeks in customer loyalty training. After training if employees could not fit the culture of the company then they were offered money to leave Zappos believe that if you want to serve customers well inspire your employees so that whoever comes in contact will be served well

Zappos also encouraged its managers to spend time with their teams outside the office, in order to improve communication and trust at the workplace. Other unique practices designed to raise employee morale included birthday parades and nap times. Every year, Zappos also released a 300-page culture book that carried stories and testimonials from their employees and other partners about working with the company. Word of Mouth Brand Image Sales Zappos time invested in planning and training = investments in planning media.. Every person is an advertising vehicle getting 1000s phone calls per day x 365 days Huge amount of touch points with the customer

Twitter
Tweets. By 2007, 10,000 followers...... Subdomain twitter.zappos.com What zappos employees are doing right now? Pg 9 for twitter

Order Fulfillment
Shifted from California to Kentucky to ensure faster delivery as United Parcel service, the largest domestic shipping hub was only 20 miles away from Kentucky New warehouse was centrally located

It was discovered that 33% sales were lost due to lack of stock in adequate sizes. Online retailers had a benefit here as they had time between order and delivery

Until 2003 Drop shipping did not stock all goods but only 80-90%. Rest transferred 2 wholesellers or manufacturers. Drop shipped products contributed 25% revenues for the company.

In 2003 Withdrew drop shipping despite contributing 25% of revenues. As it was taking a lot of time for delivery as it passed through channels. Now they started stocking all products Outcome of stocking all products: Better control in order fulfilment process, Reduced time in delivery vis a vis drop shipping,

In 2008 100% goods displayed on website, 4 million items, 1000 shoe brands, 99% accuracy

Warehouse 24/7

Other Strategies
Offline adv to develop brand image Most ads aimed @ suppliers rather than customers, when gained confidence of suppliers, focus shifted to customers Invest heavily on advertisements Costly sports stadium signage for brand awareness Cost effective online mark. Tech. SEM for online searches Used affiliates whom it called associates 2 direct web traffic to site

Provided data to 1200 vendors to enable them have an idea about product sales

Zappos Daily shoe digest 2 its customers Email discussion Invited shoe manufacturers 2 work as partners, offered a service called powered by zappos

Challenges
Prices will lead to decline in sales as consumer reluctant to pay nly for services when buying branded products Stores Dilute brand image by selling through diff websites Tough 2 get new customers Eliminate drop shiping High rate return 3 times vis a vis brick and mortal stores Competition from new entrants like endless.com, shoebuy.com, piperlime.com