Zappos.

com: Developing a Supply Chain

To Deliver Wow

z
Case
Presentation
Presented By:
Group 7
Krishna Singh 1701164
Vishal Saurav Runda 1701113
Mukesh Kujur 1701146
Meghan Kamath 1701145
Mandar Patil 1701151
Anisha Ekka 1701003
z
Company Overview
 World’s largest online shoe
retailer founded in 1999 by
Nick Swinmurn

 Known for its high quality

experience: deliver “wow” to
customers, suppliers, and
affiliates

 $1 billion annual gross sales

(2008)

 3% of U.S. population are

Zappos’ customers
 z
Case Overview
• Slowing Growth faced by Zappos’
• Global Financial Recession of 2008
• Growing cost-consciousness of customers
• Cost constraints faced by company as financial pressures
increased

• Several supply chain inefficiencies existed

• Problem with Inbound Freight – Difficulty in coordinating with
suppliers, scheduling problems – Leading to uncertainty as to
when shipment would arrive
• Traffic management problems due to the large number of
shipments received

• Need for Zappos to address these problems while mapping a path

towards future expansion
 Zappos’ Core Competencies
z

The ability to provide a huge range of shoes of different styles,

size and color that best fit their customers. By selling shoes
online, Zappos can provide customers with much more choices
than the traditional shoe stores.

Zappos is the persistence in providing excellent customer

service. They placed much importance in their hiring and
training process to ensure employees are able to create
“emotional” relationship with customers.

Customer service is the utmost priority by providing that

something extra which compel their customers to be “WoW-ed”
at the end of the day.
z
Sources of Competitive Advantage

4 5 6
1 2 3
Faster web-site Extensive Fit and return 24/7 customer Free rapid next Excellent supply
loading time information policy support day delivery chain operations
about the using the under
products promising (3~5
days) and then
over delivering
tactic(overnight)
 z

How sustainable are

they?
 Zappos customer service and warehouse management
has a unique value whereby it focuses on creating
memorable online shopping experience for their
customers.

 Providing excellent customer service not only increases

their revenue, it also resulted in many reliable returning
customers.

 As for the warehouse management, Zappos regularly

upgrade their system to ensure next day delivery is
possible.

 It seems that the company is sustainable if they carry on

with their way of doing things and not compete on pricing,
as they would not be able to provide huge discount due to
the high costs related to providing superior customer
service.
z
Role of Corporate culture of Zappos
Zappos focuses a lot on:

Positive
Teamwork
&
Innovation

Right
Personality Openness &
&
Strong Bond
Culture Effective
Communication

Sense of
belongingness
&
Empowerment
to make
decision
z
Importance of Next Day Air Shipment
 Next-day air shipment is important as Zappos is trying to create the similar
feeling of buying a shoe from a physical store. That is the feeling of gratification
and the desire to wear the shoe immediately.

 The importance of next-day air shipment, without additional charges, can be

measured by the satisfaction level of customers.

 Zappos immediate processing of customer’s orders reduced the waiting time

tremendously, helped to create the “WoW” impact.

 It is definitely worth the cost as it is the business model of Zappos, which is to

sell ‘service’. Next-day delivery is important to have as this will greatly enhance
customer experience.

 This helps build a strong bond between the customers and Zappos, which
increases the likelihood of a repeat purchase in the future. Also, customers that
are ‘Wow-ed’ will spread these positive experiences through feedback channels
online or word-of-mouth and these can serve as advertising for Zappos.
z
Business Expansion: At Low Cost
Zappos can start off by selling products that are similar to the existence of its core shoe
business. For instance, selling of electronics for sports (i.e. smart watches), to even
furniture such as shoe cabinets.

Zappos can then make use of AI or Machine learning systems to recommend affiliated
products to customers

Zappos can also leverage on the data they hold and provide better service at a low cost.

Hire the right people for the job, this reduces costs like product knowledge training and
can still allow them to provide customers with the same ‘WoW’ experience

As Zappos only manage to target 3% of the population, there is large room for growth
within the country itself. Also, with the proliferation of the Internet users, more people
shop online as compared to before. As of 2010, there are 172 million online shoppers in
the US. There is definitely a huge potential in US for Zappos.
 z
Analysis of Cost-Conscious Consumer

Impact On Zappos Counter Action Of Zappos

 Initially promote products at low discount rates to
 Zappos core competency is to deliver their
attract cost-conscious customers so that they get
best service and products to the customers.
used to Zappos’ products and services.
These cost-conscious consumers should not
affect their business much as they make up a  Zappos can also manufacture selective products with
small percentage of Zappos customer base. their own private label by analyzing the consumers’
buying habits data so that these cost-conscious
 However, as more people are looking online
consumers can have a cheaper alternative to the
for best deals, Zappos cannot ignore these
products that they prefer to purchase.
cost-conscious customers even though they
do not affect the company much. Moreover,
 Zappos purchased a discount online shoe retailer,
there are many different online sellers and
6pm, in 2007. The products displayed in that website
Zappos might lose customers if their prices are
are generally those which need to be cleared due to
more expensive than their competitors. It can
the excess inventory or those slow moving stocks in
have a detrimental impact on Zappos in the
Zappos and can be sell at cheaper price. It allows the
long run.
cost-conscious customers to go to 6pm.com website
and enables Zappos to obtain sales from these group
of people too, without spoiling the branding and
image of Zappos.
Any Questions???