Zappos Case Study
Company Profile
Zappos started out by selling shoes online to become the world’s largest online retailer of shoes. Subsequently, in their quest to boost sales, they moved beyond footwear to become an E-tailer that sells ‘anything and everything’.
Since its founding, sales have grown exponentially from US$1.6 million in 2000 to US$1B in 2008 (Exhibit 1.). This strong growth was dependent on a strong and loyal customer base, which in turn was dependent on employees who were passionate about and took pride in their work by providing exceptional customer service in their quest to ‘WOW’ their customers.
In addition to excellent customer service, two complementary reasons for exponential sales growth were the large number of SKUs available as compared to inventory carried in the brick-and-mortar stores and shorter delivery times that amazed customers.
Industry Profile
The online shoe retailing industry typically purchases goods from manufacturers at wholesale prices, which are then sold to customers at retail prices. As a result, the industry is projected to generate revenue of US$7.8B in 2012, with a current and estimated annual growth of 17.4% between 2007-2012 and 10.2% between 2012- 2017.
Annual growth is estimated to increase since the market is still fairly unsaturated. Furthermore, since online shopping has only recently gained acceptance as a shopping channel, the industry’s long-term prospects will be aided by rising consumer confidence, since it contributes to customer satisfaction and retention.
Major companies include Amazon.com with a 10.4% market share, which acquired Zappos.com in 2009 to become an expert in online shoe sales overnight and Footlocker Inc, with a 5.3% market share. The rest of the market is fragmented and made up of other companies like Nike Inc and Shoebuy.com Inc.
Core Competencies
When the CEO describes his business as a “service company that sells shoes,” he highlights Zappos’ competitive advantage. Zappos concerns
Zappos started out by selling shoes online to become the world’s largest online retailer of shoes. Subsequently, in their quest to boost sales, they moved beyond footwear to become an E-tailer that sells ‘anything and everything’.
Since its founding, sales have grown exponentially from US$1.6 million in 2000 to US$1B in 2008 (Exhibit 1.). This strong growth was dependent on a strong and loyal customer base, which in turn was dependent on employees who were passionate about and took pride in their work by providing exceptional customer service in their quest to ‘WOW’ their customers.
In addition to excellent customer service, two complementary reasons for exponential sales growth were the large number of SKUs available as compared to inventory carried in the brick-and-mortar stores and shorter delivery times that amazed customers.
Industry Profile
The online shoe retailing industry typically purchases goods from manufacturers at wholesale prices, which are then sold to customers at retail prices. As a result, the industry is projected to generate revenue of US$7.8B in 2012, with a current and estimated annual growth of 17.4% between 2007-2012 and 10.2% between 2012- 2017.
Annual growth is estimated to increase since the market is still fairly unsaturated. Furthermore, since online shopping has only recently gained acceptance as a shopping channel, the industry’s long-term prospects will be aided by rising consumer confidence, since it contributes to customer satisfaction and retention.
Major companies include Amazon.com with a 10.4% market share, which acquired Zappos.com in 2009 to become an expert in online shoe sales overnight and Footlocker Inc, with a 5.3% market share. The rest of the market is fragmented and made up of other companies like Nike Inc and Shoebuy.com Inc.
Core Competencies
When the CEO describes his business as a “service company that sells shoes,” he highlights Zappos’ competitive advantage. Zappos concerns