Zappos: Comprehensive Case Study on Business Strategies and Practices

This case study provides a comprehensive analysis of Zappos, a leading online shoe and clothing brand known for its exceptional customer service and unique organizational culture. The report delves into the company's external environment, examining political, economic, social, technological, legal, and environmental factors impacting its operations. An internal environment analysis, including a SWOT analysis, highlights Zappos' strengths, such as its strong brand name and customer service, and weaknesses, such as its lack of offline presence and the impact of Amazon's acquisition. The marketing mix (7Ps) is examined in detail, including product offerings, pricing strategies, promotional methods, and the role of people, process, and physical evidence in the customer experience. The study also explores Zappos' brand identity, image, and positioning, assessing their impact on customer base, revenue, and overall business performance, including the role of social media marketing and digital marketing strategies. The analysis concludes with insights into Zappos' success factors and future opportunities.

Running head: Zappos - Case study analysis
Case study analysis
Zappos

Zappos: Case study analysis 1
Contents
Introduction......................................................................................................................................4
External environment analysis.........................................................................................................4
Political........................................................................................................................................4
Economic.....................................................................................................................................4
Social............................................................................................................................................5
Technological...............................................................................................................................5
Legal.............................................................................................................................................5
Environmental..............................................................................................................................5
Internal environment analysis..........................................................................................................5
Strengths.......................................................................................................................................6
Weaknesses..................................................................................................................................6
Opportunities................................................................................................................................6
Threats..........................................................................................................................................7
Marketing mix.................................................................................................................................7
Product.........................................................................................................................................7
Place.............................................................................................................................................7
Price.............................................................................................................................................7
Promotions...................................................................................................................................7
People...........................................................................................................................................8

Zappos: Case study analysis 2
Process.........................................................................................................................................8
Physical evidence.........................................................................................................................8
Brand identity and image.................................................................................................................9
Impact of brand identity, brand image and positioning.................................................................10
Increased customer base.............................................................................................................10
Increased revenue.......................................................................................................................11
Acquisition by Amazon.............................................................................................................11
Loyal employees and customers................................................................................................11
Brand equity...................................................................................................................................11
Excellence in customer service..................................................................................................11
The extra effort...........................................................................................................................12
High quality products.................................................................................................................12
Market segmentation and targeting...............................................................................................12
Geographical segmentation........................................................................................................13
Demographic segmentation........................................................................................................13
Behavioral segmentation............................................................................................................13
Promotional methods.....................................................................................................................13
Social media marketing..............................................................................................................14
Television advertisements..........................................................................................................14
Word of mouth publicity............................................................................................................15

Zappos: Case study analysis 3
Digital marketing.......................................................................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................16

Zappos: Case study analysis 4
Introduction
Zappos is a leading shoes and clothing brand with massive online presence. Over 80% of the
business is earned from the shoe business. The company was founded in 1999 under the
leadership of Tony Hsieh (Bolman & Deal, 2017). The brand is well known was its excellent
customer service and unique organizational culture. Zappos was acquired by the Amazon Inc. in
the year 2009. The company’s culture is managed under 10 values which for the core of the
Zappos culture. Zappos has worked hard at ensuring the consistency of their culture since
inception days (Warrick, 2017). This has in turn led to increased effectiveness of their customer
service and satisfaction.
This report throws light on the external and internal environment in which the company operates.
In order to understand the marketing strategy of any business, it is essential to understand the 7Ps
of that firm. The report contains the details of the 7Ps of Zappos as well as the brand’s image,
identity and positioning in the industry.
External environment analysis
External environment analysis helps in identifying factors that directly or indirectly impact the
organization (Makos, 2015). These factors largely determine the ease with which the business
can function in the given environmental scenario.
Political
There are various political factors that affect Zappos. The political state of the country always
has a direct impact on the growth and development of businesses in the country. The recent
election of Donald Trump and the introduction of new tax policies will directly impact Zappos.
Economic
Economic stability of any country directly impacts the businesses of that country. At present, the
increasing inflation of USA and improving disposable income of people is a boon for Zappos.

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Social
The behavior of people regarding the frequency of buying shoes is improving. The average
amount of money that people spend on shoes has also increased. These social changes have
proved beneficial for Zappos and have led to their increased sales.
Technological
The increasing population of internet savvy customers and continuous progression of online
shopping among users is a major technological advantage that is positively impacted Zappos
sales.
Legal
There are various laws that Zappos is governed by and it is imperative that the brand abides to
these laws. The hacking incident faced by the company resulted in them being charged by
various law suits which adversely impacted the company’s business and resulted in decreased
brand equity.
Environmental
Consumers today are becoming largely aware about products that are socially accepted and
environment friendly. Zappos has effectively tapped upon the changing environment and has
been adopting various strategies to suit its current environment. One such example is the
introduction of vegan shoes which were introduced by the brand to target its increasing number
of vegan consumers.
Internal environment analysis
SWOT analysis is performed by organization to gauge a better idea about their internal as well as
external environment. The strengths and weaknesses focus on the company as a whole and its
USPs and areas of improvement. On the other hand, opportunities and threats refer to those
existing outside the organization and into the immediate environment.

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Strengths
1. Brand name: the strong brand name of Zappos is one of its biggest strengths. The name
has now become synonymous to excellent customer service and holds a positive brand
image in the minds of its consumers (Warrick, Milliman & Ferguson, 2016).
2. Organizational culture: Zappos is well known for its organizational culture which is fun
and original (Burke, 2016). This has led to increased employee satisfaction and hence
larger retention.
3. Customer service: The brand is well known for its excellent customer service provided to
all the customers including free returns, quick delivery and efficient after sale service
(Henson, 2016).
4. Information technology: Zappos manages its inventory in real time through an effective
IT system which is 99% accurate.
5. Social media presence: the brand has a very strong social media presence across various
platforms including Facebook, Twitter and Instagram. Their CEO Tony Hsieh has over
2million followers on twitter. This has led to establishment of a strong brand positioning
(Tuten & Solomon, 2017).
Weaknesses
1. Amazon acquisition: Even though the brand name of Amazon has ensured that the deal is
successful and that Zappos can function as an independent identity (Eremina & Puhakka,
2017), but such steps adversely impact the brand positioning of the company.
2. No offline presence: the lack of an offline presence marginally shrinks the target market
of the brand as there are still many people who are not as technologically averse and
hence find it difficult to shop online.
Opportunities
1. New product lines: Currently 80% of the Zappos business comes from its shoes. The
remaining 20% comes from eye wear, bags and clothing. This evidences the huge
dependency of the brand on its shoes business. Therefore introducing new product lines
would prove to be fruitful for the company and lead to an enhanced customer base.

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2. Expanding geographies: The brand has an excellent opportunity to enhance their
geographical boundaries by starting to ship at international locations and enhance
customer base. This would lead to higher sales and increased brand awareness.
Threats
1. Cybercrime: Increased cybercrime has been posing a major threat to the brand especially
after their website got hacked in 2012 which compromised the personal information of 24
million customers.
2. Increasing competition: The online shopping industry is going leaps and bounds by the
day. This has led to an increasing direct competition of Zappos.
Marketing mix
Product
Product part of the marketing mix throws light on the basic offering of the company. 80% of
Zappos’ business comes from shoes and 20% from bags, clothes, eyewear and other accessories.
The company offers over 50000 variety of shoes including vegan shoes. The product line of
Zappos is long enough to attract a wide target segment. Zappos ensures that the products sold on
the website maintain a high quality. The company continues to change and mold its offerings to
suit consumer demands.
Place
At present Zappos sells its products to United States of America and military APO/FPO
addresses. Their international presence is nil and should be worked upon. Since the company is
an online store, there are no offline stores of Zappos.
Price
Due to the large variety of offerings, Zappos follows a fixed pricing strategy. The products range
varies from premium price products to competitively priced products. The brand offers free
returns and offers to deliver the products to the customer with no shipping charge. However,
people have noticed a slight appreciation in the product’s pricing in the recent past.

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Promotions
Promotion strategies are adopted by companies to reach out to their target customers. Zappos has
been promoting its products through advertisements across television, newspapers, billboards
and social media platforms. Zappos billboard often contain catchy taglines that grab the
onlooker’s attention. Zappos has been advertising on television and newspapers. Tony Hsieh has
always insisted his employees on being active on social media platforms and provide a face to
the organization (Hollensen & Raman, 2014).
People
People of Zappos includes its employees, customers, investors and all other stakeholders.
Employees of Zappos are truly satisfied and the company has maintained an over 70% employee
retention. Even when the organization shifted base, over 80% of the employees relocated in order
to remain associated with the firm. Zappos also tries to ensure that their customers are truly
satisfied. The brand goes an extra mile to fulfill the customer requirements.

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Process
Process are means adopted by the business to achieve the desired outcome desired by the
organization (Wirtz & Lovelock, 2016). Zappos is an online platform. The website reflects
products that are available with the brand. Once the consumer has made a purchase, Zappos then
ships the product to the customer. In order to manage its inventory, Zappos has a highly effective
tool which is 90% accurate and helps the firm in effective management of their inventory.
Physical evidence
The physical evidence for Zappos includes its office space in Nevada and other locations. The
warehouse of the brand are also part of their physical evidence. The products delivered to
customers as well as billboards placed across the country are physical evidences of the
company’s presence.
Brand identity and image
Brand identity of any company or brand stems from the company itself. This includes the core
businesses of the brand, various processes they adopt as well as their short term goals and long
term missions (Wheeler, 2017). Brand image on the other hand relates to the image that the
consumers of the brand have in their minds about the brand. Brand image is the consumer
perception and is superficial. While brand identity is the firm’s reality.

Zappos: Case study analysis 10
Brand Identity of Zappos: The Company is an online platform to buy shoes, bags, clothes and
other accessories. The brand has a significant presence in the US. The company’s tagline is
‘Delivering happiness’. The company has followed a customer centric approach in their product
offerings. Zappos offers a wide variety of products to its customers and has also ensured the high
quality of its products. These products and their quality also form an important part of Zappos’
identity along with the effective technology of the business (Kissel & Büttgen, 2015). Lastly, the
company employees and all other direct and indirect stakeholders collectively form the brand
identity for Zappos.
Brand image of Zappos: The brand is well known for its large variety of shoes as well as its
efficient delivery of products on time. Zappos has a customer centric image and that has led to an
increased customer base. The trust and faith that people have shown in the brand owing to its
quick delivery of products and effective after sale service have added to the positive image of the
brand.
Impact of brand identity, brand image and positioning
Brand identity refers to the identity of the brand that has been created by the company itself. This
includes the company’s logo, tagline, product lines, and quality of products, targeted customers,
pricing policy, employees and all other stakeholders of the business (Aschauer, 2018). Brand
image on the other hand, is ideally created by the company’s customers. A good quality of
offerings, creative advertisements, impeccable services, timely delivery and a positive vibe of the
brand creates its image in the minds of the consumers. Brand identity, image and positioning of

Zappos: Case study analysis 11
any brand directly impacts its performance. The impact of these three aspects on Zappos are as
below:
Increased customer base
One of the primary advantage of a positive brand image is an increased customer base. The word
of mouth advertising of Zappos has had a large impact and enhanced the reach of the brand to
numerous geographies within the USA (Armstrong, Kotler, Harker & Brennan, 2015). An
increased customer base in turn enhances further reach of the brand which in turn yields more
customers. This circle is the effect of the positive brand image and identity of Zappos.
Increased revenue
Since the positive image of the brand yields more customers, the revenue of the company
automatically enhances. Positive image and the right positioning of Zappos has led to an
increasing demand among consumers. The increasing demand of Zappos products leads to higher
sales for the brand which in turn leads to enhanced revenues.
Acquisition by Amazon
Even though getting acquired by another company is not always a profitable venture for a firm,
getting acquired by and becoming a part of a brand as large as Amazon Inc. has its own set of
advantages. This opportunity has been presented to Zappos only owing to its positive brand
image and positioning in the market. Such an acquisition has profited the business and only led
to an increased service reach.
Loyal employees and customers
Zappos is well known for treating its employees well which only adds to the already positive
image of the firm. Such a culture and the excellent service offered by the band has yielded them
a set of loyal customers. Loyalty in the customer base often results in repeat purchases and hence
yearns an enhanced revenue for the business (Aruna & Anitha, 2015).