Evaluating Zappos' Competitive Advantage Using RBV Theory

This essay explores how Zappos achieves a sustainable competitive advantage through strategic management, focusing on the Resource-Based View (RBV). It examines Zappos' tangible and intangible resources, including its strong culture, reputation for customer service, and capabilities in strategic management. The analysis highlights Zappos' ability to compete, thrive in the market, and identify critical competencies. The company's unique approach to online shoe retail, emphasis on employee values, and effective management structure are identified as key factors contributing to its success. While acknowledging areas for improvement in supply chain management and international expansion, the essay concludes that Zappos' strengths and loyal customer base have paved the way for lasting competitive advantage.

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STRATEGIC MANAGEMENT: ZAPPOS
Introduction
Strategic management is the monitoring, continuous planning, assessment and
analysis of all the aspects of an organization to meet their objectives and goals. Strategic
management helps the leaders of the company to assess the problems that is currently running
in the company and to create insightful strategies that might help to overcome the problem
that is currently residing in the company. strategic management involve the analysis of the
strengths and weakness of the company internally and externally, coming up with effective
plans and to execute the plans successfully, evaluating the plans and to check what measures
are working for the company that are being taken or implemented. Strategic planning is
important for a company to address their short term as well as long term goals that helps to
plan the future of a company. This essay sheds light on the ways in which Zappos achieves
sustainable competitive advantage through strategic management.
Discussion
Zappos is an online clothing and shoe retailer, based in Las Vegas, Nevada. Nick
Swinmurn founded the company in the year 1999. The current CEO of the company is Tony
Hsieh. Initially the key people in the company were skeptical about the business proposition
made by Nick Swinmurn of selling shoes online as the internet was booming during this time.
The company garnered success because of their shoe products that were available in multiple
sizes and colors. The company later expanded due to their growth in the market and their
good reputation for excellent customer services. Zappos has managed to make a mark in the
market because of its uniqueness as it started the business of online shopping long time ago

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and had forecasted the future of the internet that is one of the most important innovations in
today’s world. The key factor of the success of Zappos is the happy and loyal fan base that
they had garnered (Kopelman et al. 2012). The company Zappos follows the resource-based
theory to pave way for the sustainable competitive advantage. This theory states that an
organization should strategically position themselves based on their resources and capabilities
rather than their products and services only. The important aspects of the resource-based
theory are tangible resources, intangible resources and capabilities (Hitt et al, 2016).
Under the tangible resources falls the physical aspects of the company like the
infrastructure, the cash, equipment’s and many more. The company expected sales of $1
billion in the year 2008. They had about 9 million customers that made them a high grossing
company. Zappos has not been affected by a major impact from economic slowdown and the
collapse in the financial market. This majorly affected the behavior of the customer but still
customers were buying from Zappos through different channels. The changing economy had
an impact on sales but the company was more focused on how prepare0 for difficult times
and improve the business,
Intangible resources include a company’s culture, reputation and the presence of
skilled employees. Different factors have contributed to the success of the company are their
culture and values. The company has very strong cultural values that the management has
raised and nurtured. According to the CEO, the culture meant the innovation of new products
that cater to the consumers, to create a health work atmosphere, build relationships like
family, the teamwork and a workplace where employees are not in pressure. The company
hires and provides a training to make sure the employees are well equipped with the
company, which becomes a positive aspect, as it is necessary for employees to understand the
work process of the company in order to provide fruitful outputs (Warrick, 2017). Zappos
reputation has helped the company to sustain their customers and get new buyers mainly
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because of their services and the operations carried out by the employees. The services
include the extraordinary shopping experience, shipping and return policy, the call center.
The company has provided an extraordinary shopping experience by providing them with an
easy to handle website, by providing the details of the products and by the availability of
products in multiple colors and sizes that is not available everywhere in the shops. The
shipping of the products are free and fast that has made the customers happy while shopping
here. The call center is one of the reasons of customer satisfaction. The communication
process and handling of queries shows the loyalty of the company towards their customers.
Capabilities are the primary concept of the resource-based theory. Capabilities usually
arises over time as the company takes action that are built on their strategic resources.
Capabilities here means the company’s capabilities in strategic management. These
capabilities can be classified in different categories like the ability to compete, to thrive in the
market, to identify critical competencies and to analyze the strategic values. Zappos has an
ability to equip the capabilities, skills and resources to acquire competitive advantage. This
helps them to increase the company’s value and to survive over time. Zappos has the ability
to compete with internal and external issues that arise in the company because of the strong
management and the dedicated employees. With effective inputs and meticulously working
of the employees have helped the company reach this position. It is necessary to grow and
remain financially viable despite of competition in the market. The capability of the company
thriving in a market is commendable, as Zappos has faced competition by many brands like
Sketchers, Aldo, and JustFab to name a few in the market. Many elements contribute to the
company’s strategic capability. Elements that include organizational structure, human
resources and employee skills and leadership qualities all contribute to a company’s
competitiveness. Thus, while hiring employees certain values are assessed like how they
embraced change, their service delivery, how creative were they, how they pursue growth,
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how fast is their learning capability, honesty in their work and relationship, passion and
humble. These factors matter that helps in enforcing a healthy and a happy working
environment that helps ensuring the outputs of the employees. Employees with these
attributes tend to work efficiently that helps the company to sustain their competitive
advantage. These factors play a huge role in creating a circumstance where the company or
an organization is at a favorable position in the market (Warrick et al, 2016). The idea to sell
shoes online was one of the biggest USP of the company. Previously people would buy shoes
in stores where the options of design, color, style and size were all limited, Zappos gave their
customers a unique way to shop shoes and the idea of getting shoes delivered right at the
doorstep, which became an advantage for them in the market paving way for competitive
advantage.
The development and the change in operation style of the company Zappos has paved
way for enjoying high position in the market. Initially the big brands did not want to be a part
of a startup company. Most brands wanted to connect directly with the consumer that Zappos
was already doing. This led the big brands to associate with Zappos. This attraction of brands
led attraction of customers. Zappos dealt with issues effectively with different operating
methods. Traditional shops waited for new season to approach, discarded the old styles of
shoes, and replaced them by the current trend. The company did not have to discard the other
shoes but sold them for cheaper later.
The structure and management of Zappos has helped them effectively to generate
sustainable competitive advantage. All the factors and elements present in the company has
helped the company to become popular and successful. However, the company has
opportunities to improve in their supply chain management. Due to inbound freight the
company, the difficulty in coordinating results in uneven deliveries. Possibilities for
increasing the efficiency of the outbound freight was assessed. This could make many
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countries receive their products overnight making it less expensive for the company. The
other drawback of the company is that the company has not expanded in many countries. The
company has expanded in Canada and intends on international expansion but has failed to do
so specifically outside North America due to the cost that is needed to shift in other countries.
However, this is a minor problem and the company mostly bares positive traits that helps the
company to sustain their value and position. Their services and products over shadow the
minor problems residing in the company.
Conclusion
Zappos is one of the largest shoe retailer companies in the world. Zappos has a built a
loyal fan base and has tasted success in the market because of their products, their unique
approach to the market and the services provided them. The contribution of the key leaders
and the employees has immensely helped in the growth of the company since it started. The
systematic way of working and the dedication of the employees in carrying out all the jobs
with efficiency and dedication has helped the company sustain the external competition in the
market. However, Zappos has a few drawbacks in terms of their supply and expansion in the
market but the positive aspects have led the company to survive in the market despite of
strong competition. The company has built a good reputation in the market creating a fan
base that has helped to pave way for the sustainable competitive advantage.
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Reference
Hitt, M.A., Xu, K. and Carnes, C.M., (2016). Resource based theory in operations
management research. Journal of Operations Management [online]. 41, pp.77-94.
Kopelman, R.E., Chiou, A.Y., Lipani, L.J. and Zhu, Z., (2012). Interpreting the success of
Zappos. com, Four Seasons, and Nordstrom: Customer centricity is but one‐third of the
job. Global Business and Organizational Excellence [online] 31(5), pp.20-35.
Warrick, D.D., (2017). What leaders need to know about organizational culture. Business
Horizons [online]. 60(3), pp.395-404.
Warrick, D.D., Milliman, John.F. and Ferguson, Jeffery.M. (2016) Lessons Learned From
Zappos on What It Takes to Build High Performance Cultures. Organizational
Dynamics [online]. 562, pp. 1-7. [Accessed 26 March 2019].
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