Ranjan Birla

Marketing of Services

Introduction and Brief History

Year 1999

Milestones a) Nick Swinmurn creates online footwear retail site b) Renames it to Zappos.com a) Nick Swinmurn and Tony Hsieh work as Chairman and CEO respectively b) Zappos record $ 1.6 Million as sales a) Zappos sales reach $ 8.6 Million a) Zappos leases Fulfillment centers in Kentucky b) Sales reach $ 32 Million Gross slaes at Zappos rise to $ 70 Million a) Sequoia Capital decides to infuse cash in Zappos b) Zappos moves its HQ and Call Center to Nevada c) Employee feedback is solicited for its first "Culture Book" d) Gross Sales rise to $ 184 Million

2000
2001 2002 2003

2004

Introduction and Brief History (contd)

a) Sequoia increases capital investment to $ 35 Million b) Alfred Lin, Cofounder at Venture Frogs joins as CFO c) Quit now bonus of $ 100 offered to new recruits, if they think that they are isfit in the organization. d) Sales hit $ 370 Million a) Nick Swinmurn leaves Zappos owing to conflict of relocation to Las Vegas and to follow his passion of another start up. b) Gross sales climb to $ 597 Million a) Zappos launches Canadian website b) Zappos goes for slew of acquisitions of smaller online retail sites. c) Gross sales at Zappos hit $ 840 Million

2005

2006

2007

About Tony Hsieh - CEO

1994-95: Started Pizza delivery business in college 1996-98: Link Exchange (Online Advertizing) Sold to Microsoft for $ 265 Million 1999: Venture Frogs (Investment Firm) Invested in Zappos.com 1999: Joined Zappos as Co CEO 2005: Became sole CEO

3Cs First C - Company Culture

Tony thought that from anything to everything can be copied but not the company culture, this he thought as the differentiator. 2005 Zappos set the frame work of 10 most important core values Core values were set up based on feedback from the employees. Employees were encouraged to spend 10-20% of their free time socializing outside of work, to develop that greater bonding. 2008 started the Culture book Started: 225 Hours of core training 160 hrs of initial/ new hire training (induction program) Additional Courses on soft skill development addressed based on requirement. Optional training on Great Teams, Leadership Zappos Style & Cultivating culture

2nd C Customer Service

Believed rapid growth was due to happy customers Imbedded free shipping and fast delivery CLT teams were considered problem solvers CLT handled 5100 calls/ day Goal was to WoW the customer and to establish personal connection A record set by CLT employee of 5 Hrs and 20 minutes, for an unsatisfied custome PEC delivered: Personal, Emotional Connection Help Customers find shoes even if Zappos carries that brand or not. Strive to beat customer expectation No of calls handled was never an evaluation criteria for CLT employees, instead customer feedback was most important. Call center turnover in 2009 was 7% where as the industry standard was 150%

Distribution Centers
Originally conducted business through independent shoe stores Started in house inventory in 2000 Purchased abandoned building and used it is a distribution center. By 2003- 75% of all orders were directly shipped from fulfillment centers Additional benefits like Internet Caf, Karaoke were provided as incentives for boring and mundane job, and also it required to work late. 38% of cases order to ship time was less than an hour. Employee motivation and comfort were taken care of well, which served as better stimulant for efficient work than pay for performance

3rd C - Clothing

2006 In pursuit of growth, additional lines of business were considered, Clothing topping the chart. US clothing market was 4 times bigger than footwear market Zappos started clothing business with the brands they already had a relationship Within 1 year Zappos had 130 different clothing brands 2007 Clothing reached 5% of Zappos sales 2008 Zappos sold $ 31 Million in apparel sales Challenge at Zappos was, they wanted Zappos to be associated as a leading serv company and not a shoe, clothing retailer.

Suggestions to Zappos
Customers are changing the way they shop on line since the economy slowed down. They are not as quick to buy, so they should invest more time and money in marketing campaign Online shopping continues to evolve into unforeseeable possibilities (likely, due to the fact that several decades ago, no one could have predicted the magnitude of the internet) so, they should retain customers by giving privilege cards to frequent customers with redeemable points. cultural framework can get impacted due to acquisition as The co. has built a specific culture over a period of time. Merger will bring different kinds of pressures and if not in line with the existing value system, it can lead to employees getting disoriented so, they should continue with existing culture core values I've learned that people will forget what you said, people will forget what you did, but People will never forget how you made them feel. -Maya Angelou

Q& As