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Some milestones of Zappos:

1999 - Found by Nick Swinmurn as Shoe.com and was renamed as Zappos - a

variation of the Spanish word Zapotas which means shoes.

2000 -Records $1.6 million in gross sales (exhibit 6) - Zappos had 150 brands and
400.000 pairs of shoes
2001 - Nick Swinmurn and Tony Hsieh as Co-Ceo of Zappos - Sustained effort
produces $8.6 million in gross sales

2002 - Zappos ranked highest out of 10,000 e-commerce websites as pure play
online footwear retailer. The brand elevate gross sales to $32 million
2003 - Gross sales Zappos rise to $70 million

2004 - Gross sales Zappos more than double to $184 million

2005 - Sequoia increases its investment in Zappos to a total of $35million - Alfred

Lin, cofounder of Venture Frogs, join Zappos as CFO - Gross Zappos sales increase to
$370 million - Zappos moved its headquarters to Las Vegas
2006 Zappos introduced Powered by Zappos Gross sales at Zappos climb to $597
million

2007 - 6pm.com is acquired by Zappos - Zappos expand its product categories to

include eyewear, handbags,clothing, watches and kids merchandise - Gross sales at
Zappos hit $840 million
2008 - Gross sales at Zappos hit $1 billion - Zappos net Revenue of $635million and
net income of $10.8 million - Buy Kiva Mobile Fulfillment System (Kiva MFS)
2009 - Sold to Amazon.com for $1.2Bil

3Cs

1. The first C -Company Culture

A differentiator which gave a competitive edge
Inspired by the philosophy of Starbucks Chairman-We only hire people
that smile
A strong company culture with 10 core valuesDeliver WOW through service
Embrace and drive change
Create fun and a little weirdness
Be adventurous, creative and open minded
Pursue growth and learning
Build open and honest relationships with communication
Build a positive team and family spirit
Do more with less
Be passionate and determined
Be humble
Outstanding customer service
1999- Free shipping
Could print shoe sizing template, live online chat sessions with product
experts
Shoe was photographed from 9 different angles
Wrote descriptions about style, fit and materials
Switch from manufacturing shipping directly to its customers to carrying
inventory

An outstanding recruitment process to hire the cultural fit

Pipeline created by Roger Dana- a process used to devlop employees from

entry level to the highest level of management.
225 hours of core level training
160 hours of customer loyalty trainings
Science of happiness
Classes on overcoming conflict, stress etc
39 hours of leadership Training
Nonhierarchical company, Everyone had same foundation
Sets expectation that anyone could potentially rise to senior management

2. Second C - Customer Service

Fast, free shipping
Wide selection of more than 1200 brands
Availability of special sizes
Customer friendly interface
Call center representatives
a. Avg of 5100 calls handled everyday
b. Problem solvers- Answer queries by surfing on internet
c. No time limit- Word of mouth will increase
d. Develop PEC-

e. Send handwritten thank-you notes and Bouquets of flowers or boxes of

candy
f. Used customer feedback rather than traditional call center metrics
3. Third C - Clothing
2006- Zappos began to pursue several additional lines of business
a. Purchasing a discount footwear site, running e-commerce sites for
other companies , offering private-label products and providing online
business advice
Started testing athletic apparel
b. Powerful engine for growth and expansion than trying to grow
internationally in just shoes and accessories
c. Customers could establish identity
Signed up 300 apparel brands
d. Started with brands where they already had relationships
Differences in Business Model of both the categories:
In shoe industry there are only two seasons, where as in clothing there
are four
Had to figure out what to buy and how quickly they have to sell it out
Sizing was less standard for clothing than it was for shoes
Shall experience higher returns rates in future.
Challenging to get customers to think of Zapoos as more than a shoe
company- apparel was 5 % of Zappos Sales
Wanted to associate its name with service, not with shoes or even
clothing
We are a service company that happens to sell shoes, And clothing, And
handbags, And Accessories. And eventually anything and everything
SWOT Analysis
Strengths
Innovation
location in US
Online Growth
Loyal Customers
Emphasis on Customer Service
Great shipping rates and service
Strong Brand Name and Company culture
Oppurtunity
Employee
Takeover small retailers
companies
International Shipping
irrelevant or outdated
Infinite growth
Acquisition by Amazon

Weakness
Not many visible
No price comparisons

Threats
External changes
Acquisition by larger
Products become

Zappos Service Blueprint:

Zappos Service Triangle:

QUESTIONS:
Q1) What challenges or changes in strategy would you anticipate for Zappos
following its acquisition by Amazon?
Q2) What are the general, high-level strategies that lead to the success of Zappos?
Q3) Why was Zappos so successful in its first 10 years from 1999-2009? What
evidence is presented in the case of the companys success?