Building a Successful Business Model

The provided content is about Zappos, a company that has maintained certain steps of values to achieve success. These values include delivering services with 'WOW' characteristics, creating fun and little weirdness, being adventurous and open-minded, pursuing continuous learning and growth, building positive teams, believing in doing more with fewer efforts, embracing change, being humble towards customers, and maintaining open and honest relationships through communication.

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“ESSAY- STRATEGIC MANAGEMENT”
(A Case study on Zappos.com)
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TABLE OF CONTENTS
Introduction..........................................................................................................................................3
Zappos.com and its sustainable competitive advantage.......................................................................3
About Zappos...................................................................................................................................3
Sustainable business model of Zappos.............................................................................................4
sources of competitive advantage.....................................................................................................5
Conclusion............................................................................................................................................7
Works Cited..........................................................................................................................................8
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INTRODUCTION
This study focusses on Zappos.com and its sustainability in the world of retailing business where
they serve the ultimate competitive advantage among other retailers. A detailed analysis has been
made on the behalf of Zappos about their business model and also the sources of competitive
advantage in this study.
ZAPPOS.COM AND ITS SUSTAINABLE COMPETITIVE ADVANTAGE
ABOUT ZAPPOS
Zappos.com is one of the main leading online stores of several products, where shoes are the
main product and it is maintaining its business growth for a long period of time from the
year of 1999. Its beginning story is very interesting. Nick Swinmurn was while roaming in
the roadside of San Francisco searching for a pair of shoes; he found that one pair from a
store was fit the size, but not the colour again another one was of right colour, but not the
size. This incident inspired him to start a new business which is the specialized of shoes and
that online retail shop was named as Shoesite.com (Baird, et al., 2012). Afterwards, Nick
renamed his online shoe store as Zappos.com against the word zapatos in Spanish and that
means “shoes”.
At present day, Zappos is not only selling the shoes but includes all the other essential and
valuable products , like clothing, kids sports, bag and backpacks, and other accessories
through their online portal. As per the revenue, Zappos grew from $1.6 million in the year
2000 to the amount of $1.64 billion in 2010 .i.e. within a decade Zappos increase almost
1000 times in its business. This success is only for the 100% satisfaction of customer and its
investment by stakeholders. According to Tony Hsieh, CEO of Zappos, this company serves
the brand which is all about happiness whether there are customers or employees or even the
vendors. In every place, Zappos has made its market with a great satisfaction to the
consumers for their special design and attractive nature of shoes (Zappos.com, 2017).
After beginning for some years, Zappos has struggled a lot where they just made the sales
without any profit. At the end of 2002, Zappos made the sales of $32 million which was still
not up to the mark of profit. After 2003, Zappos gave stress on their customer service and
thus they had made possible of complete value chain which is from the order from the
customer to the delivery of the product (Rosenbaum, 2010). In 2004, Zappos set up a large
pool of call centre employees with the support of 24 by 7 services from Las Vegas. Within
2007 the company made his first profit when their annual sales reached to $840 million.
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From there, Zappos became popular for its uniqueness in work environment and the ways of
approach to their valuable customers (Zappos Insights., 2017).
Source: (Wit, 2016)
After, 2010, the journey with Amazon has begun when Amazon bought Zappos against $1.2
billion. As per CEO, Hsieh, Zappos can continue its journey with its unique brand, business
or culture even there is an acquisition by Amazon and according to their agreement with
Amazon, Zappos would be freely operate its business keeping Hsieh as CEO where his
annual salary is $36,000. In this merger, Hsieh made another $214 million whereas Amazon
distributes almost $40 million to the employees of Zappos (Ponterfract, 2015).
SUSTAINABLE BUSINESS MODEL OF ZAPPOS
The unique business model of Zappos focusses only on the customer service. This
company follows the business model for serving their customers as well as handling the
issues which is totally different from other industries. Zappos believes in the happiness of
customers and thus accordingly they establish the setup the great customer service
opportunity. This model makes Zappos business sustainable within the competency of
retailing world (Soo, 2010).
As per the core competency of Zappos, it is the design of exclusive size, style
and shade of shoes. In case of almost all stores , there are a comparatively small selection of
styles and as well as the they do not have the full set of match pairs in shades and sizes and
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not even the styles which the customers actually prefer with their clothing. Also this is not
an unexpected view in case of physical constraints in those shoe stores. As they only store a
limited variation in shoes under a limited capacity and those are also not in exact figure for
all types of people so as to make choice from the available stores in local market. So, the
requirements of the consumers lie to access the huge collection of shoes with different
styles, sizes and shades for all kind of ages. So, after analyse the market requirement
thoroughly, Swinmurn has launched his shoe business through online portal with a risk of
uncertainty whether consumer would prefer to buy them through online stores without
checking them physically. In spite of this fact, there is good response from the market. And
soon, Zappos becomes the world’s leading online store of shoes that makes considerable
profit and that is growing quickly. Also there is a marvellous result in shopper service which
makes Zappos a stable position in retailer market. This is the result of sustainable
competitive advantage that serves Zappos as the king in Internet retail business (Ballati,
2015).
SOURCES OF COMPETITIVE ADVANTAGE
It has also been noted that Zappos has stretched their product offering which is based
on the feedback they are provided by the customers and also the enthusiastic employees. In
spite of that, there is only 3 % of the U.S. population take the services of Zappos products,
for that reason, Zappos become online for rest of the world to find the other world’s
preference as per their shoes concerned (Feloni, 2015).
In those scenarios, Zappos serves the following competitive advantages:
1. Financial Success.
2. Corporate culture and the also the value of the company.
3. Capital raising which provides the best product to the customers.
4. Fit as well as return policy for the company
5. Free and rapid delivery
6. Online information about products or the unique customer service.
7. Zappos 24 by 7 call centre.
8. Attractive products make the brand a success (Rapp, 2015).
It has been also noted that Zappos has the main leading online store that maintain a
certain level of growth with a certain output for the long period of time. After beginning in
San Francisco, with the initiation of Crag’s list Zappos expands in its business mainly
depending on the services of 24 by 7 call centre. According to Hsieh, as the call centre is the
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part of the corporate headquarters, rather to outsourcing the other channels which may be
remotely located, they get the extra advantage to know about their customer’s experience
directly over phone or via portal. The call centre thus works for this intention only. The Bay
region is very expensive and this is also not the right environment to access the suitable
employees in case of stuffing the call centre that they would believe the essential
requirement for the company’s success (Myers, 2011).
Source: (Baird, et al., 2012)
So for that they have decided to move Zappos in Las Vegas which is a service-
oriented city where the service of 24 by 7 is also possible. Las Vegas has already many call
centres and also has a provision of very good connectivity of Internet as well. Therefore,
Zappos has also begun to sell the entertainment goods as well as the electronics products as
because the most of their employees are the passionate gamers and also wants to sell the
gaming gears (Hargis & Bradley, 2011).
From the late of year 2008, there are also some non-shoe products that Zappos has
started to sell and those includes baggage, clothing, electronics products, such as, video
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games, phones, computers, cameras, also other GPS devices, eyewear, house wear, watches
together with jewellery. Also the outdoor vertical site which includes the items, like tents,
water filters, stoves, lanterns and along with the items which is important to the outdoor
enthusiasts. This is because of the purpose that, customers who are not interested in
mountaineering boots, re fervent about the outdoors and also they are keen to receive a good
range of products. On the other hand, the vertical sites also include the essential items with a
great range of items in view of focussing the customer’s attraction in those areas (Mena &
Chabowski., 2015).
Finally, Zappos has maintained the following steps of values which provide it’s the ultimate
way of success and those are:
1. Zappos always deliver their services with “WOW” characteristics.
2. They create the fun along with little weirdness.
3. They are adventurous, open-minded and creative.
4. They pursue the continuous learning and follow the growth.
5. They build the positive team with the family spirit.
6. They believe the principle to do more using fewer efforts.
7. They embrace and also drive the change.
8. They are humble towards the customers.
9. They build open along with the honest relationships maintaining in
communication.
10. They are humble (Hitt, et al., 2012).
CONCLUSION
From the above discussion, it is concluded that Zappos has played the important role in
internet retailing business and they serve the best business policy model where the customers is not
only their consumers ,but also their researchers as they only value their comments at any cost. This
significance made Zappos the great success in the world of business.
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WORKS CITED
Baird, H., Gallegos, B. & Shelton, B., 2012. Zappos:Delivering Happiness to Stakeholders.
[Online]
Available at: https://danielsethics.mgt.unm.edu/pdf/Zappos%20Case.pdf
[Accessed 08 11 2017].
Ballati, A., 2015. You Should Care About Holacracy. [Online]
Available at: https://albertobalatti.wordpress.com/2015/04/04/you-should-care-about-holacracy/
[Accessed 08 11 2017].
Feloni, R., 2015. Here's how the 'self-management' system that Zappos is using actually works.
[Online]
Available at: http://www.businessinsider.in/Heres-how-the-self-management-system-that-Zappos-
is-using-actually-works/articleshow/47531572.cms
[Accessed 08 11 2017].
Hargis, M. B. & Bradley, D. B., 2011. STRATEGIC HUMAN RESOURCE MANAGEMENT IN
SMALL AND GROWING FIRMS: ALIGNING VALUABLE RESOURCES. Academy of
Strategic Management Journal;, 10(2), pp. 105-125.
Hitt, M., Ireland, D. & Hoskisson, R., 2012. Strategic Management Cases: Competitiveness and
Globalization. 3rd ed. Boston, Massachusetts, United States: Cengage Learning.
Mena, J. A. & Chabowski., B. R., 2015. The role of organizational learning in stakeholder
marketing. Journal of the Academy of Marketing Science, 43(4), pp. 429-452.
Myers, I., 2011. What makes Zappos competitive?. [Online]
Available at: https://www.quora.com/What-makes-Zappos-competitive
[Accessed 08 11 2017].
Ponterfract, D., 2015. What Is Happening At Zappos?. [Online]
Available at: https://www.forbes.com/sites/danpontefract/2015/05/11/what-is-happening-at-
zappos/#301a55ce4ed8
[Accessed 08 11 2017].
Rapp, A., 2015. The Power Of Culture As A Competitive Advantage. [Online]
Available at: https://www.forbes.com/sites/yec/2015/09/15/the-power-of-culture-as-a-competitive-
advantage/#185189be3f6b
[Accessed 08 11 2017].
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Rosenbaum, S., 2010. The Happiness Culture: Zappos Isn’t a Company — It’s a Mission. [Online]
Available at: https://www.fastcompany.com/1657030/happiness-culture-zappos-isnt-company-its-
mission
[Accessed 08 11 2017].
Soo, J., 2010. Zappos Grows Demand to $1.2 Billion (+17%). [Online]
Available at: http://www.excitingcommerce.com/2010/03/zappos-grows-demand-to-12-billion-
17.html
[Accessed 08 11 2017].
Wit, K., 2016. 5 Reasons to Add WhatsApp to Your Customer Service Strategy. [Online]
Available at: https://blog.case.org/2016/07/11/5-reasons-to-add-whatsapp-to-your-customer-
service-strategy/
[Accessed 08 11 2017].
Zappos Insights., 2017. The Zappos Family Story. [Online]
Available at: https://www.zapposinsights.com/about/zappos/the-zappos-story
[Accessed 08 11 2017].
Zappos.com, 2017. About Zappos. [Online]
Available at: https://www.zappos.com/c/about-zappos
[Accessed 08 11 2017].
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