Zappos

KELOMPOK 7 MM EKSEKUTIF B 27C

DIAN ATIKA RAFIKA - RERY INDRA KUSUMA
 CASE SUMMARY

MAIN ISSUE

PROBLEM STATEMENT

ANALYSIS

RECOMMENDATION
CASE SUMMARY
YEAR Milestones
1999 - Found by Nick Swinmurn
- A variation of the Spanish word Zapotas which means
shoes.
2000 - Zappos records $1.6 million in gross sales (exhibit 6)
- Zappos had 150 brands and 400.000 pairs of shoes

2001 - Nick Swinmurn and Tony Hsieh as Co-Ceo of Zappos

- Sustained effort produces $8.6 million in gross sales
2002 - The brand elevate gross sales to $32 million
2003 - Gross sales Zappos rise to $70 million
2004 - Gross sales Zappos more than double to $184 million
2005 - Sequoia increases its investment in Zappos to a total of
$35million
- Alfred Lin, cofounder of venture frogs, join Zappos as CFO
- Gross Zappos sales increase to $370 million
- Zappos moved its headquarters to Las Vegas
YEAR Milestones
2006 - Nick Swinmurn leaves Zappos
- Gross sales at Zappos climb to $597 million
2007 - 6pm.com is acquired by Zappos
- Zappos expand its product categories to include eyewear,
handbags,clothing, watches and kids merchandise
- Gross sales at Zappos hit $840 million
2008 - Gross sales at Zappos hit $1 billion
- Zappos net Revenue of $635million and net income of
$10.8 million
- Buy Kiva Mobile Fulfillment System (Kiva MFS)
2009 - Sold to Amazon.com for $1.2Bil
 Zappos Gross Sales by Year

$1,000

$800
Gross Sales $M's

$600

$400

$200

$0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Gross Sales 1.6 8.6 32 70 184 370 597 841 1014
 Owning the 3 Cs:
Clothing, Customer Service, Culture

Culture

Customer Service

Clothing
 COMPANY CULTURE
- Differentiator that gave the company competitive advantage
- 2005 Zappos core values
- 2008 created culture book
- Started a pipeline :
- 225 hours of core training
- 160 hours initial/new hire training
- Additional courses: effective communication, coaching,
overcoming conflict & managing stress
- Additonal 39 hours: Inspiring Great Teams, Leadership
Zappos Style & Cultivating Culture
 COMPANY CULTURE
Zappos Core Value
1. Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and a Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More with Less
9. Be Passionate and Determined
10. Be Humble
 Customer Service
Believe rapid growth was due to customers loyalty
CLT team receives an average of 5,100 call per 24 hours
Goal is to wow customers & establish personal connection
Call times is not measured
Call center turnover in 2009 was only 7% whereas industry
average was 150%
Do not implement a pay-per-performance or reward system
Fulfillment Center outside Louisville, kentucky, consist 3 storage
area :
Static Racks freestanding shelving units
Carousels ferris wheel type shelving units
Kiva Automated storage & retrieval system using inventory
pods
Customer Service
 Customer Service
What customers first see
24/7 customer service representative
Free shipping
Free return shipping
365-day return policy
 Customer Service:
What customers experience
Fast, accurate fulfillment
Most customers are surprise-upgraded to overnight
shipping
Create WOW
Friendly, helpful above and beyond customer service
Refer customers to competitors web sites
 Clothing
2006 pursued additional lines of bussines
U.S clothing market was four times larger than footwear
market
Within 1 year Zappos had 300 different apparel brands
2007 clothing reached 5% of Zappos sales
2008 Zappos sold $31 million in apparel
MAIN ISSUE
 Main Issue

Zappos Strategic: Clothing, Customer

Service, and Company Culture

Acquisition Zappos by Amazon on 2009

Continuing to Grow Zappos after 2009

PROBLEM STATEMENT
 Zappos Growth

Hsieh and Lin knew that much of Zappos

growth, and hence its value, had been due to
the companys strong culture and obsessive
emphasis on customer service.
 Company Culture
Whats the meaning with Zappos philosophy
in their culture?
you cant have happy customers without
having happy employees, and you cant have
happy employees without having a conmpany
where people are inspired by the culture
 Customer Service
How could Zappos customer become loyalty
customer?
75% of Zappos orders were from repeat
customers.
Zappos Financial Management

How overcome their financial

management?
 Zappos Acquisition

Why Amazon was choose to acquisition

Zappos?

What are the effects of Amazon acquistion?

ANALYSIS
Real Power of Service :
RAPID
GROW!!
100X SALES 2008 = 1000K
INCREASE USD
WITHIN 6
YEARS

2003 = 70K USD

Visionary Concept of Service
Visionary Internal Marketing Concept :
Unique corporate culture
Unique requiretment method
Different KPI measurement to ensure service
Holocrary

Visionary Interactive Marketing Concept

excellence customer service
interface of excellence order

Excellence of External Marketing Concept

book, webpage, holocracy
Service Beyond Expectation
5 hours customer service support on call

Delivery in two way

Easiness to Return the good

Acquisition by Amazon
What Next??
 After Acquisition
The acquisition closed on November 1, at a valuation of $1.2 billion (based on Amazon's stock price on the day
of closing). Our investors at Sequoia made $248 million. Our board was replaced by a management
committee that includes me, Jeff, two Amazon executives, and two Zappos executives. As CEO, I report to
the committee every quarter, and Zappos is responsible for hitting revenue and profitability numbers. But
unlike our former board of directors, our new
management committee seems to
understand the importance of our culture -- the "social experiments" -- to
our long-term success. In fact, one Amazon distribution center recently began experimenting
with its own version of Zappos's policy of paying new employees $2,000 to quit if they're unhappy with
their jobs.
Otherwise, Zappos continues to operate independently. Our relationship is governed by a
document that formally recognizes the uniqueness of Zappos's culture and Amazon's duty to protect it.
We think of Amazon as a giant consulting company that we can hire if we want --
for instance, if we need help redesigning our warehouse systems.
In the first quarter of 2010, net sales at Zappos were up almost 50 percent, and
we've added several hundred new employees. The growth has made Amazon very happy, but it's also
creating new challenges. I've noticed that at company happy hours, you don't see as many employees from
different departments hanging out with one another.
 Why dont all companies Inspire employees with vision
try to build strong thats bigger than
cultures? I believe we themselves, that goes
accomplish more through beyond money, profits, and
inspiration the size of market share. It is
about raising the bar for
everyone

Weve been young and

scrappy, managing We are not selling
business very tighly. With shoe. We are
more people as well as SERVICE Company
capital we can grow much
faster
RECOMMENDATION