Zappos has a strong organizational culture, which was developed and nurtured by the management (Marks, Lee & Hoyt, 2011). Hsier once stated that the company's culture embodies many different elements. It's about creating relationships, and treating each other as families, thereby attracting more workforce and ensuring there is productivity. Zappos also provides an exceptional shopping experience for its clients, and also a free return policy. Zappos is always customer-centric and wants clients to say "Wow!" after purchasing their products. The company also provides broad product information, preserving a call center (customer loyalty) and free overnight shipping of ordered products to the client (Marks et al., 2011). For example, most consumer interactions were done online, where approximately 95 percent of orders were sampled (Marks et al., 2011). In a nutshell, Hsieh stated that the company focused on creating a "Wow!" experience for its clients, because if a customer gets an exceptional experience with the product, he or she will likely tell a friend. It will ultimately result in growing the sales volumes and profit margins of Zappos (Marks et al., 2011).
Zappos' Sources of Competitive Advantage
The company's supply chain system has grown tremendously as one of its sources of excellence (Marks et al., 2011). Zappos realized that its main competition in the shoe industry was brick and mortar shoe, and to create a competitive edge over them, they created an online website where clients would shop more conveniently and easily (Marks et al., 2011). After closely assessing consumer behavior, they found out that the most profitable clients were not those who returned back the least products (Marks et al., 2011). Therefore, the managers implemented a free return policy suited to different brands and styles. (Marks et al., 2011). Zappos has also focused on attracting brands, such as Nike, thereby drawing clients to shop in their company as opposed to their rivals (Marks et al., 2011).
The Sustainability of Zappos' Competitive Advantages
Zappos has established a cluster of key values and culture which beliefs in their clients and employees (Marks et al., 2011). They further create a culture of caring and friendship by treating their customers well. Zappos' has an attractive customer base, and great discounts (75%) on purchases are reserved for returning clients. It impacts their revenue and sales margin (Marks et al., 2011). Zappos concluded that to effectively provide exceptional service to its clients, they would need to establish its own distribution outlet, meant to fulfill the high SKU requirements of the business (Marks et al., 2011). Now it would practically be possible to deliver in Kentucky from Louisville, thereby growing their customer base (Marks et al., 2011). Zappos stopped relying on drop-shipments and resulted in bringing all their inventory in-house and this helped to augment the inventory accuracy to nearly 100 percent (Marks et al., 2011).
Zappos' Triple-A Standard Supply Chain
Zappos' does not only have a fast and cost-effective supply chain system, but they are also agile and adaptable to technological changes, customers' interest, etc. (Lee, 2004). For instance, the company has no-added cost returns on the shoes obtained by the client (Lee, 2004). Zappos' embraces the triple-A supply chain through embracing agility, adaptability, and alignment. On agility, the firm develops a collaborative relationship with vendors (Lee, 2004). Adaptability, assess the needs of ultimate customers. On alignment-Zappos' fairly share risk, costs, and gains of upgrading initiatives (Lee, 2004).
Lee, H. L. (2004). The triple-A supply chain. Harvard business review, 82(10), 102-113. Retrieved from: file:///C:/Users/User/Downloads/Hau%20Lee%20article.pdf
Marks, M., Lee, H., & Hoyt, D. (2011). Zappos. com: Developing a supply chain to deliver WOW. Retrieved from: file:///C:/Users/User/Downloads/Zapposcom__Developing_a_Supply_Chain_to_Deliver_WOW!.pdf
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