Zappos.com: Developing Supply Chain to Deliver WOW Strategic Management of Operations Prof. Saibal Ray By: Jaycie Zhang Xinqi Wang Arturo Cabezudo Maria Campos Juan Carlos Neira Executive Summary Zappos.com is a privately held online retailer with an extensive product category mainly including apparel, footwear, handbags, and watches. Headquartered in Nevada, it primarily operates in the US with about 1,300 employees and revenues mounting to $635M in 2008. Thanks to its strength in offering an outstanding customer shopping experience and strong corporate cultures and values related to customer service, it was the largest online shoe retailer in 2008, with a positive growth outlook. However, in the face of possible economic …show more content…
Zappos is always looking for new ways to WOW every customer and always treat every employee like family. The employees consider Zappos a fun place to work. In addition, Zappos` commitment to customer service satisfaction is clearly demonstrated by their value propositions and represents their core differentiation strategy. These are free shipping, guaranteed 5 day delivery (WOWing the customer, where 49% of customers will receive their product within 2 days), a 365 day return policy and 24/7 customer service. Unique Products and Innovation - The core products that Zappos offers are designed to be distinctly different from the traditional shoes available in brick-and mortar stores. Zappos provides customizable product models and extensive product information to customers. For example, Zappos` site has a detailed discussion of gait that helps customers to determine which type of shoe is appropriate for them. Weaknesses - Presence Limited to Online Market - Although there are many online shoppers today and the number is still growing, Zappos is unable to reach the majority of retail shoppers by only having the online outlet channel. Relatively Low Profit Margin - The revenue of Zappos in 2008 is $635 million, but the company policy on product returns makes up 35% of gross sales. This is definitely crippling Zappos profits. High Dependency on UPS - Until 2008, Zappos has only one call center in Las Vegas and one distribution center in
“Zappos does not compete on price because it believes that customers will want to buy from the store with the best service and selection. The company strives to create a unique and addicting shopping experience, offering a wide selection of shoes, apparel, accessories, and home products, free shipping to the customer, free shipping and full refunds on returns, and great customer service
Retail super-giant Wal-Mart has fought its way to becoming the world's largest company. Wal-Mart’s legendary supply chain technology has allowed them to break the three-day barrier that some economists in the eighties felt that it was unbreakable. In other words, Wal-Mart is often able to replenish items on the Wal-Mart shelf in less than three days – not from the central warehouse to the shelf, but from the manufacturer to the shelf. With quick and reliable 2-day turn around, Wal-Mart is able to maintain lower levels of inventory and still meet customer demand. These lower inventory levels result in either a reduced floor plan with lower carrying costs and lower interest expense – or a greater diversity of products on the store shelves.
Zappos is an online shoes retailer that started its business in the year 1999. Later on the company had expanded its business to include the beauty products, clothing and even the housewares within its leading e-commerce website. This case emphasizes on the customer service department of Zappos Company and initially the business focused only on the drop ship method. Later on the company also increased the variety of the products. The company had also created a bricks and mortar storefront to expand the business and increase the sales of the business.
They are more like a big family. At Zappos there are lots of fun activities to get the employees involved, like face painting, wacky parades, and gaming in the lounge on breaks. Employees have the freedom to dress causal and comfortable. The company ensures customer loyalty by closely training and mentoring their team, and at the end of training they offer their employees $3,000 to leave (most of whom do not except the offer after weighing the options). Besides their fun and supportive environment, Zappos offers their employees full health care benefits, free meals, and competitive salaries. Lastly, while many other companies have call centers located outside of the country, (in order to save money) Zappos call center is located in Loss Vegas. Phone calls are not timed or scripted, which gives the employees a chance to interact with the customers on a more personal
Retail super-giant Wal-Mart has fought its way to becoming the world's largest company. Much of their success can be attributed to providing a vast assortment of products at exceptional prices all under one roof. Wal-Mart began operations in 1964 and has since become the world leader in retail. Today, Wal-Mart is visited by 138 million customers per week at their 4,750 stores. Wal-Mart operates under four basic rules in order to satisfy such a large number of customers:
Zappos’ primary selling base is shoes, which accounts for about 80% of its business. There are currently about 50,000 varieties of shoes sold in the Zappos store, from brands like Nike, Ugg boots, ALDO Shoes, and Steve Madden heels. They also serve the niche shoe markets, including narrow and wide widths, hard-to-find sizes, American-made shoes, and vegan shoes. In 2004, they launched a second line of high-end shoes called Zappos Couture.
Founded in 1999 by Nick Swinmurn, Zappos.com, initially named ShoeSite.com, has grown from an inventory-less, “drop-ship” shoe sales website that connected customer orders with shoe suppliers to an Internet shoe mega-retailer that recorded a reported $2.1 billion in revenue in
The threat of new entrants into the online shoe/apparel market is relatively small due to the fact that Zappos is such an established brand and has specialized their business model. It would be far too expensive for a new company to copy the characteristics of Zappos including their next day delivery and large overhead. The fact that Zappos was losing money initially illustrates this difficulty. Another issue that would create a high barrier to entry is Zappos commitment to the consumer through overnight shipping. Zappos stated that the overnight shipping caused them to leave their warehouses open for the entire day. Any other company would
Finally, much of Zappos’ philosophy is built around showing customers why they are better off buying shoes online as opposed to in-store. They have comprehensive information about each shoe, as well as eight photos of each product shown from different angles. Because they provide detailed information about each shoe, extensive customer feedback, and discussions about particular issues like gait, Zappos answers any reservations that customers may have about ordering shoes online.
Zappos employees truly believe that above all else, the secret to customer loyalty is making corporate culture a priority which is directly driven from their Human Resource management.
Zappos.com, established in 1999, has rapidly become a strong competitor in online apparel and footwear sales. With the original corporate vison of offering the absolute best selection in shoes; the vision has evolved over the past several years to include the goal of being the retailer that “provides the absolute best service online -- not just in shoes, but in any category” (Zappos, 2014). The online retailer stocks millions of reasonably priced footwear products; carrying thousands of hard to find brand named shoes, handbags, apparel and accessories via the company website and 7,000 affiliate partners. In recognizing their rapid success, Zappos credits it to their commitment to the customer, stating,
Zappos.com is an online shoe retailer but their main focus is customer service. Tony Hsieh is the CEO for Zappos.com and he seems to really understand the innovation strategy and
One of the world’s most successful online retailers, Zappos, has garnered substantial amount of attention in recent news. Zappos delivers an array or products over the Internet, such as shoes, handbags, offering free and fast deliveries. The company, which was newly acquired by Amazon for about $1.2 billion, remains as an independent subsidiary (Sanghera, 2015), retaining Tony Hsieh as the chief executive officer (CEO). However, as Zappos grew, innovations slowed, and the infamous company culture began to lose momentum with an expanding workforce and having more managers joining the ranks (Gelles, 2015). Hence, all eyes are set on the multi-billion dollar company, known for it’s unmatched customer service and eccentric company culture (Mitchell,
Over the last four years, I’ve delt a great deal with RFID supply chains, and have seen first hand the positive advancements that are made with them. If given the opportunity to lead this project with your company, I believe I can close the gap between Intel and it’s competitors.
Though above analysis, Zara's core competencies ensure the four criteria of sustainable competitive advantages: valuable, rare, difficult to imitate and exploited by organization meaning cannot be replaced. Zara's products express a unique style that has created sustainable position in customer's minds and make them feel in each of Zara's product. The attraction of Zara is creative in each product, innovative and unique characteristics. So it is not easy for competitors to achieve the results.