Zappos.com: Developing a Supply Chain to Deliver WOW!
Orhan Bahtiyar
Morgan Kaschak
Nitya Kotharu
Saily Mahangade
Benjamin Wu
Shuting Zhang
Prof. Brabazon
Management of Information Technology and Information Systems
July 10, 2015
I. Executive Summary
Zappos introduced a brand new business model that revolved around retaining a customer rather than spending money for new customers. Zappos had to ensure control over the delivery mechanism so they could “WOW” their customers with excellent service and delivery. They maintained their own inventory and warehouse, and developed an inventory management system. Zappos business strategy is to differentiate itself by offering an unparalleled customer service. Zappos gave call center
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Zappos should develop a price comparison tool. They should customize the website for each customer and provide exclusive recommendations and promotions. Zappos should develop International distribution centers for the the lower cost of labor and infrastructure. Zappos could form an alliance with Amazon to use their infrastructure. Zappos can offer offer discounts if a customer chooses a delayed shipment.
II. Overview For a team of two men to single handedly turn a seemingly trivial and inapplicable business idea into a company that has been consistently ranked among the best companies to work in the United States, and manage to turn Las Vegas into a dream destination for startups in such a competitive market is no easy task. Yet Tony Hsieh and Alfred Lin did just that and their business strategies, which turned Zappos into a successful company with two billion dollars in annual sales, provide a rather interesting perspective towards making and maintaining a business as both a “fun” and profitable venture. Like most startups, Zappos started with a rather radical idea. In 1999, Nick Swinmurn realized that there was no easy way to find a shoe that matched the right size, shape, color or style that he had in mind. For someone who did not have the proclivity for shoe shopping, it struck him that there must be many more who faced a similar conundrum. Thus, he created an online portal to help users choose from a plethora of options to buy new shoes. To fund his
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.
Zappos has made the online shopping experience very safe and easy. The marketing strategy used by Zappos has to be one of the best one in any market. Zappos took was given to them and turn the focus to the customer experience. The entire idea was to make the shopping experience better so that customers would return. The promotion of a fun and hip culture for the employees is a big reason this strategy is working. Employees are in good moods and so this passes on the customer. The Zappos atmosphere is fun. There are no sales goals for employee because Zappos wants the relationship between the employee and customer to be genuine.
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
He started to invest in Zappos which the concept came from Fred. Zappos was also faced with many issues all the time and they tried to eliminate the issues that Tony talks in Chapter 3. Also, he explains the relationship between the poker game and the business strategies. Although, Zappos was growing, they also confronted with the recession, the dot-com stock market crash, and 9/11. Tony solved the issues by selling his properties. He had recovered the business to have a good revenue again. It was a stressful period that Tony talks in Chapter 4. However, Zappos was still doing well. He backed to focus at customer service. Also, Zappos had used the Brand, Culture, Pipeline strategies for managing the organization in the long-term that he describes in Chapter 5. Tony had learned many mistakes from the past and continued developing the services and the stories. Nevertheless, Zappos sold to Amazon in 2009. Tony details the reason why he walks out the board in Chapter 6. In the last chapter, Tony asks the reader about the goal in life. He also summary the details about Zappos is about delivering happiness to the
Nick Swinmurn, who was inspired during an unsuccessful search for shoes, founded Zappos in 1999 (Zappos.com, 2015). He realized the opportunity, as there were no major online shoe retailers, so he quit his day job and started Zappos.com. Nick’s mission was to be a full-service online shoe retailer offering the best variety of shoes. Over the years, Zappos has set a new mission, which is to provide unsurpassed customer service in any category (Zappos.com, 2015).
CEO Tony Hsieh and the successes of his world-class customer service are know around the world for the insane things they will do to please their customers like buying shoes from a competitors store because they ran out of stock or sending a free pair of shoes to a best man who arrived to a wedding with no shoes (Edwards, 2012). Although they are well known for there customer service, it does cost them a substantial amount to be the best, to make up for these cost there are things that Zappos can do to reduce and offset its cost of customer service. Zappos has a large warehouse and within this warehouse there are several ways efficiency may be improved to reduce costs. First, Zappos can look to simplify processes to determine if product
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
Zappos, which started as an on-line shoe retailer in 1999, has grown into a multi
The Spanish retail chain Zara has unique supply chain management practices that enable it to gain a competitive advantage over other fashion retailers in the industry. Zara’s rapid response time enables the firm to quickly respond to changing fashions while deliberately under producing products. This strategy, which is supported by competencies in logistic management, design and information systems, allows the company to maintain less inventory and higher profit margins and is a key factor to Zara’s success. The firm should continue to add value by seeking new opportunities to expand in the retail market and maintain their sustainable growth.
Zappos has the capabilities to offer a variety of cyber selections such as unthinkable items of shoes, apparel, accessories, and home products, with every shopper dream of free shipping and full refunds within five business days of your returns date. Zappos willingness to think outside of the box has made a name for the corporations by employing a phenomenal innovative and creative diverse group of visionary individuals whom have made a cutting edge cyber industry. Zappos corporation make a personally commitment to serve the customers and employees has made them one of the most desirable places to work national and internationally that rewards with internal promotions. Unlike other corporations Zappos have been able to maintain its unique culture and continues efforts in developing innovative categories such as clothing and merchandise markets.
Zappos started out by selling shoes online to become the world’s largest online retailer of shoes. Subsequently, in their quest to boost sales, they moved beyond footwear to become an E-tailer that sells ‘anything and everything’.
Understanding Zappos high regard to corporate culture and customer satisfaction, they take screening for new employees very seriously and have methods to select only those individuals that will promote their corporate philosophies. Even with Amazon.com’s acquisition of the online retailer in 2009, Zappos.com culture and customer loyalty are as strong as ever.
The management team at Zappos must analyze and carefully determine which path will ultimately offer the best growth potential for the company as a whole; whether that is continuing business as usual by remaining independent, or successfully merging with Amazon.com.
First, “Retail companies have become involved in supply chain management in order to control product quality, inventory levels, timing, and expenses.” (About money). For this reason, Zara’s strategy ensured that its supply chain capabilities supported its ability to satisfy the targeted customers. In addition, Zara collects information on customer needs, integrates data with design, manufacturing and distribution functions. With this in mind, Zara concentrated its product to short lead time, lower quantities, more styles and use an effective distribution system. Similarly, Limited Brands, shifted to a high end product line that required a strategy to bring product to market and customer satisfaction. Furthermore, Limited Brands management approved the project of building a global
Zara is a clothing and accessories retailer selling stylish apparel at affordable prices, and it is also the most profitable brand of the Spanish clothing retail group Inditex SA. Ortega planned for this new Zara outlet, located near his factory in La Coruna in northern Spain, to sell this overstock merchandise himself. Since then, Zara has expanded into 500 stores in 68 countries as of January 2007 and has become a leader in customized fashion retailing. This assignment presents core competencies to help Zara achieve competitive advantages in fashion industry. Besides, we also offer five competitive objectives about quality, speed, flexibility, dependability and cost to evaluate