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Sam Zaduk
Case Study 2
Customer service is one of the core competencies behind Zappos. The goal at Zappos is to
provide the best customer service experience across all business industries. The company is the
leading online store for shoes. The company raises capital to give the best product to customers.
Their competitive advantage is seen in their financial success, corporate cultures and values of
the company, return policy, information about the products online, free rapid delivery, their call
center, and ability to attract brands of the product. Zappos maintains the level of growth at
certain outputs on long-term basis. The company positioned themselves to maximize their
competitive advantage. They didn’t outsource their call center; instead they made sure it was part
of their corporate headquarters. Zappos moved their company’s location to accommodate their
commitment to customer service. Corporate culture shapes every aspect of Zappos as a business.
The company has ten core values that play an important role in the employee hiring process, how
they train staff, and are reinforced by everyday actions throughout the organization. Zappos
refuses to hire job candidates that don’t abide by the team-oriented culture and prefers to train
current employees for higher positions. Zappos’ commitment to service quality plays a central
role in their corporate culture.
Next day air shipment is a critical to Zappos’ intended customer experience. One of their service
goals is to provide rapid delivery at no additional charge. The company strives to exceed all
positive expectations a customer has for the service. Zappos wants to set a standard of excellence
in their service that is incomparable to the customer. Their B2C method is shaped by the
emphasis of service. Zappos yearns to beat customer’s expectations in service with an underpromising and over-delivering practice. They don’t take breaks or days off with their warehouse.
Everyday the warehouse is being prepped to maximize efficiency and strive for doing whatever
is possible to get the items to the consumer the next day. This involves sacrificing profit to
upgrade ground-shipping speeds to overnight speeds. This is vital for Zappos because this is how
they wow customers with their service.
The next-day air shipment is worth the cost for Zappos. It helps their development in the field of
online selling, marketing of shoes, and other products. The delivery speeds for Zappos helps in
increasing the profitability capacity of the company. They assume added customer benefit will
increase the overall value of the company and further position it for growth. The wow reaction
from the customer is important in getting converted purchasers to become repeat buyers. Also, it
can help the company save on advertising costs by increasing the likelihood of positive word of
mouth reactions and online feedback. In the cost-conscious environment of 2008, Zappos hasn’t
shown any regression. Brick and mortar retailers reported double digit sales decreases from the
economic recession. Zappos recorded significant revenue growth throughout this same period.
Their growth is at slower rate and margins were decreasing. The costs shouldn’t be changed if
possible. Instead, Zappos needs to look at all aspects of its business for improvements and
efficiencies.
Zappos should expand their business by continuing to give the best quality to customers at the
fastest rate possible. Zappos isn’t limited to selling just shoes through their service. A good way
to expand business is to increase the amount of products available and the variety of options. For
Zappos this could be selling more non-shoe products and maximizing their warehouse space. A
brick and mortar business has to deal with all the physical restrictions of shelf space. They can’t
keep sandals on their inventory shelves during the winter months. They have to get rid of
inventory to accommodate the demand for products. This means lowering their prices for surplus
items, so they can have room to stock the items customers want. Zappos doesn’t have this issue
and can actively keep sandals or boots featured prominently on their site any time if the demand
is there. Zappos can shift prices of these items based on 60-day trends instead of seasonal ones.
The company can become more profitable in these B2C interactions by improving their ability to
gauge the consumers buying trends. Zappos can use their automated price adjusting system to
help improve the items offered to consumers.
Consumers are cost-conscious and they are constantly affecting how Zappos does business.
These customers don’t affect the company’s overall business because the Zappos has an
overwhelming amount of positive feedback. Most manufacturers of retail items have distribution
systems built around sending large number of goods to retail stores. Zappos’ ability to sell online
to individual customers is valuable to its vendors’ direct sales initiatives. The supply web helps
Zappos increase the sale of products in the online market. This benefits the bottom line for
supply producers and helps the consumers. Zappos supply web relates the online store with its
real retail store counterpart. A third party that could handle all the shipping needs for Zappos and
all other retailers could create an environment to maintain sales growth. Creating automated tools
that could manage inventory and fulfillment would maximize efficiency.
Considering the environment of a more cost-conscious consumer, Zappos shouldn’t make too
many significant changes. Increasing sales, but decreasing margins is a good way to cut costs for
the company. Also, they should stick to the core competency of service delivery. Zappos
shouldn’t reduce prices. They could explore possible alternatives like selective discounts. They
need to keep a check on consumer behavior and other websites that are viewed as competitors.
Zappos could improve the supply chain and be more improvisational with out bound freight.
Zappos shouldn’t mess with their core competencies. They can maintain sales growth in a costconscious environment with what they already have. Prices shouldn’t be lower than industry
standards. Price reductions that influence the margin can be gained through negotiations with
suppliers. They can make exclusive deals with suppliers and offer cheaper shoes through their
affiliated sites like 6pm.