zappos case ppt

7/22/2019 Zappos Case ppt

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Marketing of Services

Ranjan Birla



Introduction and Brief History

Year Milestones

1999 a) Nick Swinmurn creates online footwear retail site

b) Renames it to Zappos.com

2000 a) Nick Swinmurn and Tony Hsieh work as Chairman and CEO respectively

b) Zappos record $ 1.6 Million as sales2001 a) Zappos sales reach $ 8.6 Million

2002 a) Zappos leases Fulfillment centers in Kentucky

b) Sales reach $ 32 Million

2003 Gross slaes at Zappos rise to $ 70 Million

2004

a) Sequoia Capital decides to infuse cash in Zappos

b) Zappos moves its HQ and Call Center to Nevada

c) Employee feedback is solicited for its first "Culture Book"

d) Gross Sales rise to $ 184 Million



Introduction and Brief History (contd)

2005

a) Sequoia increases capital investment to $ 35 Millionb) Alfred Lin, Cofounder at Venture Frogs joins as CFO

c) Quit now bonus of $ 100 offered to new recruits, if they think that

they are isfit in the organization.

d) Sales hit $ 370 Million

2006

a) Nick Swinmurn leaves Zappos owing to conflict of relocation to Las

Vegas and to follow his passion of another start up.b) Gross sales climb to $ 597 Million

2007a) Zappos launches Canadian website

b) Zappos goes for slew of acquisitions of smaller online retail sites.

c) Gross sales at Zappos hit $ 840 Million



About Tony Hsieh - CEO

1994-95: Started Pizza delivery business in college 1996-98: Link Exchange (Online Advertizing)

Sold to Microsoft for $ 265 Million 1999: Venture Frogs (Investment Firm)

Invested in Zappos.com 1999: Joined Zappos as Co CEO 2005: Became sole CEO



3C’s – First C - Company Culture

Tony thought that from anything to everything can be copied but not thecompany culture, this he thought as the differentiator.

2005 Zappos set the frame work of 10 most important core values Core values were set up based on feedback from the employees. Employees were encouraged to spend 10-20% of their free time

socializing outside of work, to develop that greater bonding. 2008 started the “Culture book” Started:• 225 Hours of core training• 160 hrs of initial/ new hire training (induction program)• Additional Courses on soft skill development addressed based on requirement.• Optional training on Great Teams, Leadership Zappos Style & Cultivating culture



2nd C – Customer Service

Believed rapid growth was due to happy customers Imbedded free shipping and fast delivery CLT teams were considered problem solvers CLT handled 5100 calls/ day Goal was to WoW the customer and to establish personal connection

• A record set by CLT employee of 5 Hrs and 20 minutes, for an unsatisfied custom PEC delivered:

Personal, Emotional Connection Help Customers find shoes even if Zappos carries that brand or not. Strive to beat customer expectation No of calls handled was never an evaluation criteria for CLT employees,

instead customer feedback was most important. Call center turnover in 2009 was 7% where as the industry standard was 150%



Distribution Centers

Originally conducted business through independent shoe stores Started in house inventory in 2000 Purchased abandoned building and used it is a distribution center. By 2003- 75% of all orders were directly shipped from fulfillment centers Additional benefits like Internet Café, Karaoke were provided as incentives for

boring and mundane job, and also it required to work late. 38% of cases order to ship time was less than an hour. Employee motivation and comfort were taken care of well, which served

as better stimulant for efficient work than pay for performance



3rd C - Clothing

2006 – In pursuit of growth, additional lines of business were considered,Clothing topping the chart.

US clothing market was 4 times bigger than footwear market Zappos started clothing business with the brands they already had a relationship Within 1 year Zappos had 130 different clothing brands

2007 Clothing reached 5% of Zappos sales 2008 Zappos sold $ 31 Million in apparel sales Challenge at Zappos was, they wanted Zappos to be associated as a leading ser

company and not a shoe, clothing retailer.



Suggestions to Zappos

“I've learned that people will forget what you said, people will forget what you did,but

People will never forget how you made them feel.” -

”Maya Angelou”

• Customers are changing the way they shop on line since the economy slowed

down.They are not as quick to buy, so they should invest more time and money inmarketing campaign

• Online shopping continues to evolve into unforeseeable possibilities (likely, due tothe fact that several decades ago, no one could have predicted the magnitude of the internet) so, they should retain customers by giving privilege cards to frequentcustomers with redeemable points.

• cultural framework can get impacted due to acquisition as The co. has built aspecific culture over a period of time. Merger will bring different kinds of pressures and if not in line with the existing value system, it can lead toemployees getting disoriented so, they should continue with existing culture core

values



Q& A’s

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