Zappos
Zappos
Executive Summary
Executive Summary
Founded History Growth Products Culture
Employees Customers
Amazon
ZAPPOS
Situation Analysis
Internal Environment
Current objectives, strategy, & performance:
Zappos is a service company that happens to sell clothing, shoes, handbags, eyewear, watches (and eventually a bunch of other stuff). Zappos is Powered by Service
Providing the best online shopping experience possible. Fast, Free Shipping. Free return shipping. 365-day return policy. Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service.
Internal Environment
Availability of Resources:
Best selection
Over 1,000 brands Millions of items in warehouse 100% of products inventoried (no drop ship)
Internal Environment
Organizational Culture & Structure: Zappos operates separately from Amazon. CEO Tony Hsieh manages the company the same as pre-acquisition days. Terms of the arrangement with Amazon allows Zappos to remain committed to the values and mission of the company that has been in place since day one.
Internal Environment
Organizational Culture & Structure: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Deliver WOW Through Service Embrace and Drive Change Create Fun and a Little Weirdness Be Adventurous, Creative, and Open-Minded Pursue Growth and Learning Build Open and Honest Relationships With Communication Build a Positive Team and Family Spirit Do More with Less Be Passionate and Determined Be Humble
Customer Environment
Who are current & potential customers? What do customers do with our products? Where do our customers purchase our products? When do customers purchase our products? Why/how do customers select our products? Why do potential customers not purchase our products?
External Environment
Competition
Economic growth & stability
Online retailers such as shoebuy.com Conventional store front Online clothing has doubled over past 5 years Only 10% of retail clothing market Internet taxation Support for Nevada state margin tax
Political, legal, & regulatory issues Technological Advancements Sociocultural Trends
SWOT Analysis
Positive factors: Internal factors:
Large product selection Price competitive Excellent customer experience
Negative factors:
Large inventories Shipping costs Competitors
Strengths
Weaknesses
External factors:
Market penetration Lower overhead Customer convenience
Opportunities
State / federal regulations Reliance on carriers Reliance on internet providers
Threats
Key Questions
Where is the industry now? What are critical success factors in the industry?
Product selection Price competitiveness Free shipping No hassle returns which included free return shipping Fast delivery time
ZAPPOS
Market Product Focus
MARKET PRODUCT FOCUS
Target Market
Men Women Children
Product Market Grid Report
Agreement with West-Coasts shoe Pavilion to run its ecommerce site (shoepavillion.com) Zappos.com joined amazon.com
MARKET PRODUCT FOCUS
Market Development
Price comparison sites Deal with shoe manufacturer Partnered with AOL and several shopping sites Expanded its accessories line to include, purses, handbags, socks, wallets belt and diaper bags. Provide major shoe brand its own page
Product Development
MARKET PRODUCT FOCUS
Diversification
Offers over 1000 brands of shoes and apparel Endless inventory of shoes in virtually every style, size, and color
MARKET PRODUCT FOCUS
Differentiating Attributes
Stocks more than 3 million pairs of shoes, handbag and accessories Selection and Service
Positioning Strategy
Exclusive footwear and apparel Fortune 100 companies 50 most innovative company Ranked significantly higher than other companies in fashion industry
Zappos
Marketing Program, Strategy, and Tactics
Product
Adidas, BCBG, Guess, Calvin Klein, D&G, Ed Hardy etc.. Find product and direct customer if they do not have item
Price
Competitive pricing No coupons-feel that level of service supersedes need for coupons
Place
Falling under the umbrella of Amazon, they are visual to the largest online retailer in the world
Promotion
Engaging commercials Word of Mouth Collaboration using social media Customer service and liberal return policy Zappos Insights
Zappos vs. The Other Guys
Key Variable Service as Marketing Traditional Media Spend Toll Free Number Invitation to Interact Openness To Talk
Typical Brand Low High Hidden Hard to find Business Only
Zappos High Low Everywhere All the time No time limit 24/7
Toll Free Number Hours Typically 9-5
Outsourcing
Employees as advocates
Common
Medium
No
Normal
ZAPPOS
Financial Projections
Zappos.com Financial
Increased to over $1.2 billion sales 75% repeat customers Raised tens of millions from outside investors $48 million from Sequoia Capital 2009 only 5% profit CEO Salary $36,000 per year As of November 2009-Amazon.com
Amazon.com (2010 Financials in millions)
Net Sales Operating Exp
(Marketing = 3%)
$ 34.20 40% $ 32.79
Net Income
1.15 28%
Amazon.com Revenue Mix
(millions)
$1,075 , 3%
$15,417 , 42%
$20,439 , 55%
Media EGM Other
Zappos.com accounted for approx. $1.4 billion of EGM in 2010
Amazon.com 2011 Forecast (in millions)
Net Sales Operating Exp (Marketing = 5%) Net Income $ 36.80 35.73 $ 1.07
Zappos.com
$ 1.50
ZAPPOS
Organizational Structure
.
Zappos Organizational Structure
Relatively flat informal organizational structure Direct Response Team Key Management throughout organization Positive organizational culture Progressive leadership Worker Empowerment
Organizational Chart
Nick Swinmurn
Chairman & Founder
Tony Hsieh
CEO & Director
Arun Rajan
CTO
Alfred Lin
CFO/EVP/Ops/Chairman
Brook Schaaf
Affiliate Manager
Andy Kurlander
Sr. Marketing Manager
Qiana Jones
Affiliate Program Coordinator
Lisa Vagge
VP Marketing
Marketing Coordinator
Darrin Shamo
Direct Response Organizational Chart
Matt Burchard
Sr. Director of Content & Direct Response
Jane Feigenson
Marketing Director
Affiliate Manager
Ned Farra
Robert Avila
Marketing Coordinator
Marketing Intern
Nate Luman
Krista Augustson
Marketing Coordinator
Miguel Luman
Marketing Coordinator
Ashley Fortman
Marketing Coordinator
Vegas Toliver
Marketing Coordinator
Britni Delaney
Marketing Coordinator
ZAPPOS
Company Achievements
Let us WOW you!
ACHIEVEMENTS
From humble start-up in 1999 to #1 online
shoe retailer in 2011. One of first companies to capitalize on the emerging SEM market (Search Engine Marketing). Success due to superior customer service rather than a glitzy marketing campaign. Word of mouth marketing.
ACHIEVEMENTS
ZAPPOS Corporate Culture. Fortune 100 Best Companies to Work For. #23 (2009) Highest Ranking Newcomer Tony Hsieh, This is not just a company. Its like a way of life.
ACHIEVEMENTS
COMPANY MILESTONES
2002 - $32 Million in Gross Sales. 2006 First $3 Million in one day. 2007 Nike joins ZAPPOS. Let us WOW you!
ZAPPOS/ AMAZON
In 2009, Amazon acquired Zappos for $1.2 Billion in cash and stock. Amazon CEO Jeff Bezos allows CEO Tony Hsieh to run Zappos independently.
FUTURE OF ZAPPOS Washout?
Fast, Free Shipping Free Returns on Shipping 365- day return policy 24/7 Call Center 75% of sales- Repeat Customers #1 Online Shoe Retailer
FUTURE OF ZAPPOS
Centralized warehouse location in Kentucky. Allows for faster delivery time. Zappos stocks over 3 million shoes, handbags, accessories from over 1,136 brands. Social Media Fan Favorite- 1.7 Million Fans on Twitter.
Recommendations
Increased profit margin
Reduce inventory and shipping cost
Drop ship with select vendors that can provide transparent customer experience Eliminate low profit product lines
Partner with suppliers on customer recommended products as opposed to in house investment Utilize Amazons global network to create an international presence (45%)
