CASE STUDY: ZAPPOS; A PASSION FOR CREATING CUSTOMER

VALUE AND RELATIONSHIP

ASS# 02

AIRLINE AND AIRPORT MARKETING

NAME REG.NO

SARMAD SANAN 70077318

MUHAMMAD HAMZA 70077447

M ALI ABBAS 70078533

UJALA BATOOL 70077446

HUMAIRA DIN 70073968

 CASE STUDY: ZAPPOS; A PASSION FOR CREATING CUSTOMER VALUE AND
RELATIONSHIP

INTRODUCTION:

Zappos, primarily based in Las Vegas and found in 1999, is an online retailer. Founder is Nick
swinmurn Its preliminary aim has been to be the satisfactory website for buying shoes,
imparting a wide variety of manufacturers, styles, colors, sizes and widths.Thezappos.Com logo
has grown to offer footwear, handbags, eyewear, watches, and add-ons for online buy. Zappos’s
vision is that in the destiny, online sales will account for 30 percentage of all retail sales inside
the United States, and Zappos may be the organization with the nice carrier and selection. It now
serves more than 10 million customers annually and gross merchandise sales top 1 billion dollars
up from 1.6 million dollars in 2000. Zappos believes that the speed at which a client receives an
online purchase performs an essential role in how that consumer thinks approximately
purchasing online again in the destiny, so it makes a speciality of making sure that items get
delivered to customers as quickly as possible. In 2009, the Amazon.Com, Inc. Family of groups,
which proportion a strong passion for customer service, received Zappos. In 2010, Zappos had
skilled first-rate growth, ensuing inside the want to restructure the agency. Zappos was
restructured into ten separate agencies under the Zappos own family umbrella, consisting of
Zappos.Com, Inc. (the management employer) and agencies dedicated to retail, present cards,
vending, and order achievement.

PROBLEMS:

 Acquisition by amazon
 Effects of acquisition
 Finance management
 Annual financial loss

EXPLANATION AND SOLUTION:

 ACQUISITION BY AMAZAON:
In July 2009, Amazon acquired Zappos in an all-stock deal worth around $1.2 billion at the time.
Amazon purchased all of the outstanding shares and warrants from Zappos for 10 million shares
of Amazon's common stock and provided $40 million in cash and restricted stock for the Zappos
employees.
Amazon acquired Zappos for $1.2 billion in 2009, and kept Hsieh on as CEO. He said in 2010 he
had decided to sell to the e-commerce giant because Amazon recognized “the uniqueness of
Zappos's culture and Amazon's duty to protect it
Amazon initially offered to buy Zappos in cash, but that didn't sit well with us. In our minds, a
cash deal felt too much like we were selling the company outright, so we proposed an all-stock
transaction. Zappos shareholders would simply trade their stock for Amazon Threfore, Amazon
decided to buy Zappos in 2009 to help expand its portfolio with similar companies that can
positively impact customers. What is this? At the time, Amazon Founder Jeff Bezos said,
“Zappos is a customer-focused company.

 EFFECTS OF ACQUISITION:

Amazon’s just-announced deal to acquire all of Zappos.com stock in an exceedingly group action
price over $800 million can fuse 2 huge web firms. However even a lot of fascinating than the
deal’s size is the distinction between the companies’ cultures and makes.

On the one hand, Amazon is the undisputed leader in online retail sales and a serious technology
mastermind (See: Kindle, cloud services). However, speaking as a journalist, the corporate is
extremely non-public concerning its behavior. it'll seldom comment for a story on the record,
Associate in Nursing even then typically waits hours or days to reply to an inquiry. Client service
is notoriously nice on the location. On the phone? Not most.

Zappos, on the opposite hand, is among the foremost clear firms on the net. At its core it’s
employee-driven, having attained consistent recognition for being among the simplest employers
to figure for. This policy extends to platforms like Twitter.

Of course, what’s driven success at each firm is their intense specialization in client expertise.
That’s the basic purpose of the video below, during which Amazon business executive Jeff Bezos
talks concerning the companies’ shared passion for providing honest expertise. (Both are major
online advertisers.)
Yet there are few clues either within the on top of a video or in Zappos business executive Tony
Hsieh’s letter to workers nowadays concerning specifically however they shall pollinate. It can
Amazon, spurred on by Zappo's clear ethic, embrace social media tools?

While Bezos expresses his plans solely typically (“I’m super-excited”), Hsieh goes into a bit a lot
of detail , however solely a little: We learned that they needed the United States of America to still
build the Zappos whole and still build the Zappos culture in our distinctive means. I believe
“unique” was their means of claiming “fun and a bit weird.”

Over the past many months, as we tend to have to be compelled to apprehend one another higher,
either side became a lot of and a lot of excited concerning the probabilities for leveraging every
other’s strength.

Amazon focuses on low costs, huge choice, and convenience to create their customers happy,
whereas Zappos will it through developing relationships, making personal emotional connections,
and delivering high bit (“WOW”) client service. We accomplished that Amazon’s resources,
technology, and operational expertise had the potential to greatly accelerate our growth so that we
tend to might grow the Zappos whole and culture even quicker.

On the flip aspect, through the method Amazon accomplished that it extremely was the case that
our culture is the platform that allows the United States of America to deliver the Zappos expertise
to our customers. Jeff Bezos (CEO of Amazon) created it clear that he had an excellent deal of
respect for our culture which Amazon would look to safeguard.

 FINANCE MANAGEMENT:

Key Features Risk Analysis Dividend Policy Bond Market Bond Portfolio Interest Rate
Derivatives Portfolio Management Money Market Mutual Funds Derivatives Leasing and Hire
Purchase Factoring Foreign Exchange Basics International Finance Mergers and Acquisitions
Rights Issue Valuation About the Book: Strategic Financial Management for C. A. Final:10th
Edition Contains solutions to 900+ problems and 200+ Advanced Problems of various topics of
Financial management. Contains solved problems of final level syllabus in financial management
of most professional courses. An ideal book of practice to almost all students pursuing and
professional course having financial management as one of the subjects. Indispensable book for
final level students of CA, CS, ICWA and MBA Contains several solved problems of various
professional examinations. Include solutions to exercise problems of Strategic Financial
Management (9th Edition) written by the same author. A treasure in any library. Contents

1. Capital budgeting

2. Risk Analysis in Capital Budgeting

3. Dividend Policy

4. Bond Market

5. Bond Portfolio

6. Interest Rate Derivatives

7. Portfolio Management

8. Money Market

9. Mutual Funds

10. Derivatives

11. Leasing and Hire Purchase

12. Factoring

13. Foreign Exchange - Basics

14. International Finance

15. Mergers and Acquisitions

16. Rights Issues

 ANNUAL FININCIAL LOSS:

Annual Financial Loss means a significant decrease of the total consolidated annual revenues of
the Company as at the end of the Company's last financial year.

A profit and loss statement (FINANCIAL REPORT), or income statement or statement of

operations, is a financial report that provides a summary of a company’s revenues, expenses, and
profits/losses over a given period. The FINANCIAL REPORT statement shows a company’s
ability to generate sales, manage expenses, and create profits. It is prepared based on accounting
principles that include revenue recognition, matching, and accruals, which makes it different
from the cash flow statement.

Structure of the Profit and Loss Statement

A company’s statement of profit and loss is portrayed over some time, typically a month, quarter,
or fiscal year.

The main categories that can be found on the FINANCIAL REPORT include:

 Revenue (or Sales)

 Cost of Goods Sold (or Cost of Sales)
 Selling, General & Administrative (SG&A) Expenses
 Marketing and Advertising
 Technology/Research & Development
 Interest Expense
 Taxes
 Net Income

A FINANCIAL REPORT statement is one of the three types of financial statements prepared by
companies. The other two are the balance sheet and the cash flow statement. The purpose of the
FINANCIAL REPORT statement is to show a company's revenues and expenditures over a
specified period, usually over one fiscal year.

Investors and analysts can use this information to assess the profitability of the company, often
combining this information with insights from the other two financial statements. For instance,
an investor might calculate a company’s return on equity (ROE) by comparing its net income (as
shown on the FINANCIAL REPORT) to its level of shareholder’s equity (as shown on the
balance sheet).
An example of annual financial loss is given below.

CONCLUSION:

It has the world's largest selection of shoes, and its service includes free returns. If it doesn't have
the shoe you want in stock or in your size, a Zappos call center employee will go to three
competitors' sites to try to help you locate what you want to buy. Zappos is online shoe outlets
are a pioneering enterprise as regards to pursue the Teal organizational shape. Although the
corporation had a reasonably relaxed place of job culture, the CEO did not assume the
demanding situations that would come with the introduction of the machine. The organizational
structure manifested the equal setbacks it changed into designed to cut back, this is forms and
unwanted human emotion. Therefore to shift to a Teal enterprise, Zappos would had been higher
off adopting a less rigid Teal organizational structure.

SUMMARY:

This case introduces Zappos.com, an online shopping store, engaged in providing shoes and
clothing items for both men and women available in the market. The company was acquired by
Amazon.com in 2009, as the all-stock deal was worth $1.2 billion, as announced by the senior
management of the company in the same year. Whereas, it was evaluated that the users available
online were not all potential shoppers, as most were casual viewers logging on to a different site
just to pass time. However, it was identified that the company had grown since its establishment
towards selling a huge variety of shoe available from a vast variety of brand available in the
market. Moreover, the company increased its product range, which included clothing items for
both men and women, as well as accessories such as hand bags and wallets. They also sold
athletic equipment and kids’ necessity items, such as diaper bags, clothing, etc. the
implementation of effective marketing strategies, which, in turn, allowed the company to
increase its revenues, which had a substantial favorable impact on its profitability in the market.
The company had divided its customers into different segments, which consisted of premium
customers, who were the most profitable and loyal towards the site and were considered as
recurring customers who were highly costly to acquire with the potential to purchase higher
value items for the store. Second, young professionals, who had trouble managing their work life
were not that costly to acquire in the market and they were considered the least loyal customers
for the company. Thirdly, the off-price customers were frequent users of the internet and they
compared the price of the product offered by them and others available in the market, which
allowed these users to establish their purchasing patterns using the comparative analysis. It was
assessed that these users buying patterns were motivated by any discount offers given by various
sites available online. Lastly, the family customers, who were busy with their families spent the
least amount of time on the site and were considered least profitable for the company, attributed
to their higher return rates.

However, it was determined that the management of the company faced a major challenge in
developing effective and efficient pricing policies, which allowed the management to target the
customers present in different consumer segments developed by the senior management of the
company.