Case Study

Case Questions:
1. What is the business model for Zappos and what are its critical success factors? Sources: http://www.guardian.co.uk/sustainable-business/zappos-shoes-profits-happiness-business http://bx.businessweek.com/zapposcom/news/ http://www.businessweek.com/magazine/content/10_23/b4181088591033.htm

Business Model E-commerce website that focuses on delivering top-notch customer service to users Relies on customer loyalty by delivering happiness to customers which results in repeat business and word of mouth advertising Offers wide range of products (large product mix) Focus on service will allow us to WOW our customers, our employees, our vendors, and our investors Operates Zappos Fulfillment Centers where inventory/products are managed and shipped to customers o Zappos handles all of its merchandise itself Critical Success Factors Superior customer service o Free shipping both ways and a 365-day return policy 24/7 call center o Surprise upgrades to overnight service o 100% satisfaction guaranteed return policy o Live help chat on website o If product is currently out of stock, customer can give email so Zappos will notify him/her when the product is available again Operational efficiency Focuses on operational excellence Constantly transforming its business systems to be more efficient in deliveries and returns Corporate culture/human resources o Employees are required to 4-week Customer Loyalty Training course New employees are actually offered a $2,000 bonus to quit after Want to promote its vision of corporate culture Focuses on employee happiness Encourages weirdness and innovation Social media
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prepared for MISM 2301 by A. Dedeke and rmk, 102711 revd Oct 2012

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Launched PinPointing, a service that recommends products on its site based on the photos you pin on Pinterest CEO uses Twitter and encourages employees to do so as well Use blogs to communicate with consumers E-commerce platform o Online product information Feedback and comments of each products are visible to other customers Pictures/description of product Different payment options Connected with Amazon (can log-in with Amazon or Zappos account) Can track orders/view order history 2. Describe the application software supporting the respective business process and the IT infrastructure enabling the application software. Business Process Supplier management Application Software Supplier management software (type of SCM) Manage vendors Determine product delivery/scheduling IT Infrastructure Extranet Database Servers to store vendor, product, and order information Computers, storage devices, network equipment to run the software and communicate with other services and applications Firewall, SSL (to protect customer information) Web servers Application servers Database servers to maintain order information Computers, storage devices, network
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Order processing

Order processing software (type of EAS) Order entry and fulfillment Tracking order

prepared for MISM 2301 by A. Dedeke and rmk, 102711 revd Oct 2012

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equipment to run the services and applications and communicate with other services and applications Barcode scanners Mobile computers Wireless LAN Products could have RFID to efficiently monitor the flow of products Database servers to maintain inventory information Computers, storage devices, network equipment to run the services and applications and communicate with other services and applications Internet websites Browser required for access Web servers Application servers Database servers to store customer information Computers, storage devices, network equipment to run the software and communicate with
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Supply chain logistics and warehousing

SCM software (type of enterprise software) Inventory management Warehouse management/distributi on Quality control Product scheduling Order entry and processing

Customer servicing

CRM software Includes marketing, sales, tracking, customer relationship, and customer support functions Customer review system Include customer history/problem tracking and product documentation management

prepared for MISM 2301 by A. Dedeke and rmk, 102711 revd Oct 2012

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Social Media (Twitter, Facebook, blogs, etc.) other services and applications

Human resource management

Human resources software Benefits administration Performance Recruiting new employees Accounting and finance software (enterprise software) Records and processes accounting transactions which include accounts payable, accounts receivable, payroll

Financial management

Web Servers (employees can access company data) Database server to maintain employee information, job openings, benefits, etc. Computers Intranet (data that is inputted is private within company) LAN Database server to keep purchase, sale, and accounting information

3. Describe the role Zappos Web site and related services support its customer intimacy and operational excellence business objectives. Your answer should address the websites design (layout, functionality, and content). Website Layered and faceted navigation make it much easier for shoppers to find just what they're looking Customers can drill down to products based on brand, price, color, features, size, etc. Product information is detailed o Includes large item images, item information o Similar items/shopping recommendations o About the brand o Customer comments/ratings of product o If product has low inventory, website will tell customers the number of that product left
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o If product is not available, customer can give email to receive notification when product is back in stock Customer can log into his/her Zappos account o View purchase history o Favorite products o Can track orders Has separate websites for various customer categories (links for these websites are found on Zappos main website) o Ex. couture.zappos.com caters to high-end shoppers who want designer brands Website is fast and easy to navigate Zappos blogs CEO blog Different blogs for a variety of categories- Ex. outdoor, wedding, comfort, etc. Also shows popular posts/trendy topics across all the blogs Customers can comment on blog posts Video experience http://about.zappos.com/our-unique-culture/zappos-video-experience Allows customers to submit testimonial videos about their experiences w/Zappos Zappos showcases its favorite videos on its YouTube page as well as its website Live chat help Can ask questions/comment Chat with customer loyalty representative online (real-time) Customer Call Center Offers 24/7 customer service Can talk with representative Pinterest PinPointing webpage o Service that recommends purchases based on what users post on Pinterest o Consumers can see suggestions that correlate with their own personal pins or those of other Pinterest users Facebook page Featured photo submitted by one of its fans Users can also easily join the Zappos VIP program from the page Twitter CEO uses Twitter to communicate to customers o Asks followers for feedback o Track anyone who mentions Zappos on Twitter
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Zappos Stylists Twitter account o Posts about current trends and gives style advice

4. Describe the reasons it make sense for Amazon to acquire Zappos. Separately, describe the expertise (in terms of information systems and the use of IT) that Amazon brought to the deal that might improve Zappos eCommerce capabilities. Sources: http://www.bizjournals.com/seattle/blog/techflash/2010/05/amazon_and_zappos_how _theyre_fitting_together.html?page=all http://www.inc.com/magazine/20100601/why-i-sold-zappos_pagen_2.html http://www.wired.com/magazine/2011/11/ff_bezos/all/ Reasons for Amazon to acquire Zappos: Zappos has large growth potential Amazon and Zappos can have one set of fulfillment services for different front ends, which allows them to satisfy more customers more often, because more likely to have their size and style and color, etc. Zappos is known for its legendary customer service, which can be an asset to Amazon in the future Amazon is buying Zappos for its people its leadership and its employees. Zappos would have been the main competitor for Amazon o Zappos is now contributing to Amazons strategy of being a seller of all products Amazon could vastly boost its shoe and apparel inventory (increase selection) by combining back-end operations with Zappos Opportunity to combine operational efficiencies Amazons Expertise Zappos eCommerce Capabilities Warehouse Will allow Zappos to deliver products Use of warehouse automation to customers faster/more efficiently technology to improve productivity by (maintain fast delivery guarantee) bringing products directly to employees Zappos operates its own warehouses, who can process them faster can implement similar infrastructure as Amazon Large databases of product information Zappos can use these the databases of Databases of customer accounts Amazon to track inventory/share use of Amazon S3 (file storage) Amazons inventory data to fulfill
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Amazon EC2 (compute capacity in the cloud) customer order When customers search for products, search can utilize entire database to find availability of that product Amazon customers can use their accounts on Zappos (increases users, Amazon already has customer account can transfer this customer loyalty to Zappos) Use of Amazon S3 for content storage/distribution, storage for data analysis Use of Amazon EC2 would allow Zappos to drive data much faster through use of cloud-computing platform Zappos could implement 1-Click Zappos can use Amazon Payments as another payment option for customers

Amazons patented 1-Click express shopping technology Allows customers to bypass shopping cart Amazon Payments (directly competes with PayPal) Digital driven supply chain Extensive use of tracking Amazon also launched its Marketplace where third-party sellers can sell products Access to Amazon via mobile devices Amazon Windowshop App Amazon payments is exploring NFC Payments to develop m-commerce Amazon converted to Linux operating system (decrease technology expenses significantly)

Zappos could integrate some form of Marketplace to increase product selection Products of Marketplace could also be integrated with Zappos inventory Now, Zappos has mobile app Customers can purchase products through their smartphones Expanding e-Commerce platform Zappos OS is currently built on free open-source Linux operating systems Automatically sends daily email reminders to call a customer back (if product that was unavailable becomes available)
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prepared for MISM 2301 by A. Dedeke and rmk, 102711 revd Oct 2012

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Coordinates the warehouse robot system Produces reports that can specifically assess the impact on margins of putting a particular item on sale

Sources: http://www.fastcompany.com/most-innovative-companies/2009/zappos

prepared for MISM 2301 by A. Dedeke and rmk, 102711 revd Oct 2012

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