Developing Supply Chain to Deliver Wow
Zappos.com:
Developing Supply Chain to Deliver WOW
Strategic Management of Operations
Prof. Saibal Ray
By: Jaycie Zhang
Xinqi Wang
Arturo Cabezudo
Maria Campos
Juan Carlos Neira
Executive Summary
Zappos.com is a privately held online retailer with an extensive product category mainly including apparel, footwear, handbags, and watches. Headquartered in Nevada, it primarily operates in the US with about 1,300 employees and revenues mounting to $635M in 2008. Thanks to its strength in offering an outstanding customer shopping experience and strong corporate cultures and values related to customer service, it was the largest online shoe retailer in 2008, with a positive growth outlook. However, in the face of possible economic downturn, its underlying insufficiencies in supply chain management and operations may pose a threat to the company’s long term profitability. Nevertheless, the opportunity of possible international expansion may well be exploited to improve sales and expand the business, but such decision still needs critical evaluation and feasibility assessment in whether Zappos can sustain its focus on outstanding customer service levels in such scenario.
The online-retail industry in which Zappos operates is one in which the rivalry among existing competitors is high, as it is competing with both click-n-brick stores like Amazon, as well as traditional retail stores such as Footwear Inc which also have a strong focus on the shoe segment. However, the threat of new entrants is very low as a result of the high initial capitalization required for the start of business. There are a large number of buyers in the market. However, high price sensitivity and low switching cost strengthen the buyer`s position; continuing to attract such customers becomes one of the main challenges for Zappos during a likely scenario of economic downturn. Zappos will need to adopt strategies such as importing directly from foreign suppliers, committing to 5 day
Developing Supply Chain to Deliver WOW
Strategic Management of Operations
Prof. Saibal Ray
By: Jaycie Zhang
Xinqi Wang
Arturo Cabezudo
Maria Campos
Juan Carlos Neira
Executive Summary
Zappos.com is a privately held online retailer with an extensive product category mainly including apparel, footwear, handbags, and watches. Headquartered in Nevada, it primarily operates in the US with about 1,300 employees and revenues mounting to $635M in 2008. Thanks to its strength in offering an outstanding customer shopping experience and strong corporate cultures and values related to customer service, it was the largest online shoe retailer in 2008, with a positive growth outlook. However, in the face of possible economic downturn, its underlying insufficiencies in supply chain management and operations may pose a threat to the company’s long term profitability. Nevertheless, the opportunity of possible international expansion may well be exploited to improve sales and expand the business, but such decision still needs critical evaluation and feasibility assessment in whether Zappos can sustain its focus on outstanding customer service levels in such scenario.
The online-retail industry in which Zappos operates is one in which the rivalry among existing competitors is high, as it is competing with both click-n-brick stores like Amazon, as well as traditional retail stores such as Footwear Inc which also have a strong focus on the shoe segment. However, the threat of new entrants is very low as a result of the high initial capitalization required for the start of business. There are a large number of buyers in the market. However, high price sensitivity and low switching cost strengthen the buyer`s position; continuing to attract such customers becomes one of the main challenges for Zappos during a likely scenario of economic downturn. Zappos will need to adopt strategies such as importing directly from foreign suppliers, committing to 5 day