ZAPPOS.

COM
Global Sourcing and Supply Chain Management
Group Number 6

Pranav Goyal
Patricia Guht
Michaele Novotna
Margarida Tenente

Agenda
Case Overview

Core Competencies and Corporate Culture

Shipment

Business Expansion

Zappos Business in a Cost Conscious Environment





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Overview
1999: Founded by Nick Swinmurn
Worlds largest online retailer of shoes
Annual gross sales of $1 billion (2008)
Superior reputation for customer service
3% of the American population is Zappos customer
Aims at delivering the WOW factor in every interaction
Supply chain management: one of the sources of excellence Zappos is
about service
Acquired by Amazon in 2009
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Core Competencies & Sources of Competitive Advantage
Orientation on Customer Service
Deliver the wow service to
customers
Fast web interface and extensive
online platform information
Return policy
Trained call center operators and
toll-free calls
Supply Chain Management
Fast delivery (78% within 3 days)
Efficiencies in the distribution
center (Powered by Zappos)
Huge portfolio of products
Good relationships with suppliers
4
Labour intensive activities which might eventually
become unaffordable with the companys growth

Key role of HR: extensive training and organization
culture that supports core competencies and customer
orientation focus
Role of Corporate Culture
5
Strong customer orientation

These values played an important
role in new employee hiring
decisions, in training, and were
reinforced by everyday actions
throughout the organization

The objective is to ensure that
any new employee who stays at the
company is passionate about the
company and its values
10 Values of Zappos

1. Deliver Wow through service
2. Embrace and drive change
3. Create fun and little weirdness
4. Be adventurous, creative and open
minded
5. Pursue growth and learning
6. Rebuild 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

Core Competencies are developed based on the corporate culture
Shipment
Shipment system in cost-conscious environment
Customers can choose between 2 shipment options:

Free guaranteed 5-day ground shipment (99% of customers receive order
before the fifth day)
Premium shipment: with extra cost - guaranteed next day delivery



Importance of next day air shipment for customer experience
Deliver within guaranteed time period -> meet customer expectation
Next day shipment is not necessary for all customers
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Business Expansion
Geographical: NO
Hard to create and rebuild a comparative distribution
network abroad
The European market is very complex

Focus on local customers: YES
Only 3% of population is covered: opportunity to develop
the customer base



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How to seize the local market?
8
Focus on marketing
At the time, Zappos relies only on the word of mouth

Expand Powered by Zappos strategic concept

Growth through M&A
Reaching niche markets
Joining other platforms customer bases to Zappos

Long-term possibility: expansion into IT systems and software
E.g. CRM systems, search engines, website platforms


Managing expansion and profits
With M&A:
Lower costs through synergies
Increase of the customer base: lower cost per
customer

Focus on the local market:
Focus on efficiency in the existing distribution system

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Zappos Business in a Cost Conscious Environment
Cost conscious environment can
effect Zappos business
negatively
-> Customers look more for
price than for service


Prices should not be lower than
industry standards
-> Stick to core competencies


Selective discounts can be
offered



Cost cutting

Zappos can acquire smaller companies and can
have potential synergies -> Ex.: 6pm.com

Negotiate more with suppliers, increase sales

Improve supply chain

Get products directly from manufacturing sites
-> saves transport costs

New fulfillment center in the western part of the
Unites States
-> Would cut ground transportation cost and
transit time
-> Would improve relationship with
manufacturers



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