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

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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

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Digital marketing.......................................................................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................16

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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.

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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

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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).

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Brand equity
Brand equity of any company refers to the commercial value of the firm that is driven from its
consumer’s perceptions. Brand equity plays an important role in enhancing customer base and
improving sales of any firm (Godey, B., Manthiou, 2016). Zappos has adopted various strategies
to effectively build upon its brand equity. These strategies adopted by the brand are as below:
Excellence in customer service
Customer service offered by Zappos is truly class apart. The brand has been renowned for the
timely delivery of its products, free returns and no additional delivery charges. Zappos website it
user friendly and delivery executives as well as customer service representatives are polite,
helpful and highly trained. This level of customer service has led to increased brand equity of
Zappos.
The extra effort
Zappos has known for putting that extra effort in ensuring customer satisfaction. If the product
demanded by any customer is unavailable, the company tries to recommend a similar product
from three competitor websites. A few incidents that garnered media attention have also worked
in the favor of Zappos brand equity. On one such incident, Zappos sent a flower delivery for a
customer who called to return newly bought shoes. The customer’s husband had recently died
and Zappos found it appropriate to send wishes. On another incident, a bunch of friends called
the Zappos customer service center to enquire about pizza delivery in the area. The service
executives responded within minutes with a list of late night pizza delivery places in the country.
Such efforts have by brand have gone a long way in building an impeccable brand equity for the
brand.
High quality products
The quality of Zappos products goes through a strict check and hence the final product received
by the consumers is flawless. The CEO in fact wore the same shoes for a span of two years every
day to personally demonstrate the excellent quality of Zappos shoes. They have also been
working on enhancing their product line with an aim to make Zappos a one stop shop for all

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consumer needs. This brilliant quality of Zappos products has further added on to their brand
equity.
Market segmentation and targeting
Market segmentation refers to dividing the market into various segments of customers with
similar needs and demands. This segmentation can be done on the basis of geography,
demography, income group, gender, lifestyle or psychographic preferences (Venter, Wright &
Dibb, 2015). Once the market has been divided into segments, the businesses, then make a
choice about targeting a particular set of people from these segments. This process is better
known as customer targeting.
Market segmentation and targeting play a vital role in the success of any business. This division
and focus allows firms to effectively cater the needs of these customers. Zappos has been clear
about its target market since the inception of the business. The various segments into which
Zappos has divided its consumers are as below:
Geographical segmentation
Geographical Zappos is only targeting consumers based out of USA. At the moment they are not
exporting their products to international markets and hence the brand is fully capable of fulfilling
the needs of US consumers.
Demographic segmentation
Demographically, the brand targets people belonging to a higher income segment. This is
because, Zappos products are premium priced as compared to other brands. This is owing to the
company not charging for delivery or return. Women are targeted slightly more than men as a lot
of their promotional material is dedicated for women.
Behavioral segmentation
Due to an absence of any offline store, behaviorally, Zappos targets internet savvy consumers
who frequently shop online. Zappos has a wide variety of shoes available. Therefore the target

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market of the brand is also large. Zappos caters to the needs of a wide audience owing to the
availability of products ranging over different behavioral needs.
Promotional methods
Promotional tools are used by organizations to reach out to their customer segments and to
enhance brand awareness among people at large. Recently, businesses have become largely
innovative regarding their promotional tactics. Social media especially has become a blessing for
brands as it allows them to reach out to a wide customer segment under a single roof at a much
lesser price.
Selecting the promotional tool is crucial for the success of any business and leads to having a
direct impact to its brand equity and image. Promotional tools are ways of positioning the brand
in the minds of the consumers. Zappos as well has adopted various strategies to ensure their
reach to their customer segments. The four leading platforms used by Zappos to advertise their
products are as below:
Social media marketing
This is a leading promotional tool used today. Social media marketing refers to business
promotions conducted on platforms like Facebook, Instagram, Twitter, Pinterest and recently
even Snapchat. Leading brands today have found it imperative to mark their presence
significantly on these channels to ensure they can target a wide audience. Any organization
which is not present on social media automatically faces a competitive disadvantage. Zappos is
widely active on Facebook, Twitter, Instagram and Pinterest.
Zappos Social Audit
Facebook 2.3 million followers Approximately 1 post every
day
Instagram 103k followers 1943 posts

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Twitter 2.82 million followers 15.4k tweets
Pinterest 33k followers 73k pins
Zappos has been effectively utilizing the social media platform to ensure their higher reach to the
consumers. The brand has effectively managed to make social media a two way communication
by responding to its consumers as and when possible. The company has also depicted excellent
social listening skills. Their consistent awareness about the social image of the brand and their
continuous efforts in improving the same have helped the brand gain a large target market and an
improved brand equity.
Television advertisements
Television advertisements are one of the most primary means of advertising used by
organizations. Television ads are an efficient way to reach out to a nationwide audience in a span
of a few seconds. Zappos also has various television ads mostly attributed to their shoe business.
They also have high TOMA score (Top of mind awareness). This is due to the creativity and
innovation of their TV ads. These TV ads are also available on YouTube.
Television ads must be creatively designed, efficiently timed and effectively placed so as to
ensure a higher viewership of the ad. Zappos has successfully accomplished this. Their ads are
widely seen and often placed during peak hours at leading channels. This leads to increased
brand awareness and hence a wider customer base.
Word of mouth publicity
Word of mouth publicity or word or mouth advertising is one of the primitive yet highly
effective ways of advertising products that are used by leading brands. Word of mouth publicity
simply refers to the process within which the consumers of the brand speak well of the brand to
others and knowingly or unknowingly influence them into buying the products of the brand. This
is one of the most authentic forms of advertising and cannot be bought by the business.

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The reason behind giving special mention to this form of publicity was the effectiveness and
efficiency with which Zappos has gained ground throughout the USA by using this tool. Owing
to the excellent customer service and high quality of products offered, Zappos’ consumers have
always been promoting the products to others which has led to an increased customer base for
the brand. Zappos has smartly tapped into and put efforts towards fulfilling consumer needs so as
to ensure that they spread the word further leading to the brand attracting more customers.
Digital marketing
Digital marketing is widely used today and refers to companies marketing their products on any
digital media platforms. This specially refers to search engine optimization and search engine
marketing. Search engine optimization is the ability of a brand to enhance or optimize the
brand’s presence on search engines like Google, Yahoo and Bing etc. Search engine marketing
refers to marketing the product through these search engines.
Zappos also has been utilizing digital marketing strategies and targeting potential customers
based on their online searches and keyword uses on the internet. Zappos has been able to utilize
the cookies stored in people’s computers and target them based on their internet usage history
and customized needs.
Besides social media marketing, digital marketing, word of mouth publicity and television
advertisements, Zappos has also been promoting the brand and its products through various
billboards and hoarding spread across the country. Zappos has also used the brand image and
equity of various celebrities and associated with them through endorsements. The brand has also
indulged actively in affiliate marketing which has yielded positive results for Zappos. Lastly, the
organization has been strategically introducing event and occasion based discounts and offers to
attract the wider customer segment. The strategies adopted by the brand have been highly
effective in ensuring the brand name and image Zappos holds today.
Conclusion
Zappos is a leading online shoes brand which has now ventured into selling clothes, eye wear,
bags and other accessories. Zappos was founded in 1999 and was acquired by Amazon Inc. after
a decade of being independently in the business. The brand is renowned for its excellent

Zappos: Case study analysis 17
customer service and wide variety of products available. The information technology of Zappos
is also highly effective and 99% accurate leading efficient inventory management.
However, it is the organizational culture at Zappos which is its true strength. The employees are
motivated to be themselves. The positive work culture is evidenced in their customer service as
well as high numbers of employee retention. The brand goes that extra mile to ensure customer
satisfaction. These efforts by Zappos have been appreciated across the country and has led to the
establishment of a large and loyal customer base. The strong brand identity, image and
positioning of Zappos is a source of immense strength for the company. Zappos has competently
used social media marketing, television advertisements, affiliate marketing as well as digital
marketing to reach out to their consumers. The brand has clearly marked a significant presence in
the US markets and is a leading name in the online shopping segment today.

Zappos: Case study analysis 18
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