Internal Analysis

Company’s Strengths

o Best customer service

o High selection of shoes (brands, model variety, size)
o Very good online-shop/best online shopping experience:
o fastest, easy to navigate, advance search criteria
o comprehensive product information with pictures from 8 different
angle
o able to buy while trying several shoes with free return for 365 days
for the un-selected shoes
o Innovative fulfillment and logistic system

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 Company’s Weaknesses

o Limited interaction with customers (no face to face)

o Higher price (no lowest price guarantee, boutique-like image)

3
 Strategic Partners

o 100 brand vendors within 3 years

o Strengths:
o Already build a good image with the vendors

o Weakness:
o Vendors resistance with the pure-play online retailers

4
 What Customer Want?

o Easy to find shoes

o Try shoes before buying
o Fast and convenient
o Good customer service

5
 Internal Factor Evaluation (IFE) Matrix

Strengths Weight Rating Weighted Score

1. Customer service 20% 4 0.8

2. Large selection of shoes 20% 4 0.8
3. Customer’s online shopping 10% 3 0.2
experience

Weaknesses Weight Rating Weighted Score

1. No face to face customer 20% 2 0.4

interaction
2. Higher price 30% 1 0.3

Total 100% Rating 2.5

 External Opportunities
4

Internal 4 2.5 2.1 1 Internal

Strength Weakness
1.5

1
External Threat
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 Answer to the Questions

o Questions 1:
In 1999, the footwear market in America was sized at US$40 billion. Mail order
shoe sales accounted for 5% of the market. At that time, the online footwear
market was worth a mere US$37 million. What does this imply? Discuss your
interpretation of these facts

o Answer:
Mail order shoe market is potentially to be replaced by the online shoe
retailing due to the raise of internet services. The mail order shoe size is 5%
from US$40 billion (around US$2 billion). That means there’s up to US$2
billion potential market for online shoe retailing. Meanwhile, the current online
shoe sales is only US$37 million. This represent a big opportunity for online
shoe retailing. There’s an untapped market for online shoe retailing.

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 Answer to the Questions

o Questions 2:
On the strategic profile of the brick-and-mortar shoe store’s
a. Based on your shoe-buying experience, what are the benefits and pain
points of the brick-and-mortar shoe store?

o Answer:
Benefit of brick-and-mortar:
- We can try the shoes
- We can see the real physical appearance (material, color, detail)

Pain Point of brick-and-mortar:

- Limited option of shoes
- Take a lot of time to find the shoes you want

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 Answer to the Questions
o Questions 3:
On the strategic profile of the online shoe store:
a. If you purchase a pair of shoes online, what are the benefits and pain
points versus a brick-and-mortar shoe store? If you haven’t purchased
shoes online, what is the reason?

o Answer:
Benefit:
- The price is cheaper
- Wide variety of shoe selection
- Save time for shoe shopping

Pain Points:
- Cannot try the shoes before buying them
- Waiting period (for delivery of the shoes)
- It’s cumbersome if you need to return the shoes
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 Answer to the Questions
o Questions 3:
On the strategic profile of the online shoe store:
b. Using the Buyer Utility Map introduced in Blue Ocean Strategy, identify
blocks to utilities across the buyer experience cycle.

o Answer: (next slide)

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 Answer to the Questions
o Questions 4:
What is the difference between Zappos and online and brick-and-mortar shoe
stores? Is Zappos a typical online shoe store?
a. In light of the Buyer Utility Map drawn above for online shoe stores, which
blocks to utilities has Zappos cleared?

o Answer:
Although Zappos conducts the footwear business in the form of online
business, Zappos is not a pure online store in nature. According to their
concept: it is not competing with other internet companies, but competing with
the store experience. From the competitors Zappos sets for itself, it is more
like an offline shoe retailer rather than an online shoe distributer.

a. Zappos has cleared all the blocks to utilities as experience by other online
shoe retailers

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 Answer to the Questions
o Questions 4:
b. How has Zappos brought the shoe store to your home? Answer this
question by drawing the value curve of Zappos on a strategy canvas
versus that of conventional online shoe stores.

o Answer:
o Zappos is bringing shoe store experience to their online website. They
mirrored the look-and-feel of the brick-and-mortar retailer to its website.
o Customer is able to be delivered multiple size, to guaranty the shoe fit the
customer properly, and they were allowed to return the shoes within a year
without extra charge. Therefor, this resolved any customer’s fears of
purchasing shoe online without the opportunities to test the fit of the shoes.

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 Answer to the Questions
o Questions 4:
c. How has Zappos brought the shoe store to your home? Answer this
question by drawing the value curve of Zappos on a strategy canvas
versus that of conventional online shoe stores

o Answer:
o Zappos is bringing shoe store experience to their online website (fast, print
shoe size, 8 angles picture). They also mirrors the look-and-feel of the
brick-and-mortar retailer to its website.
o Customer is able to be delivered multiple size, to guaranty the shoe fit the
customer properly, and they were allowed to return the shoes within a year
without extra charge. Therefor, this resolved any customer’s fears of
purchasing shoe online without the opportunities to test the fit of the shoes.
o Quicker delivery than ordinary online shoe retailer.
o Excellence/Best customer service
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 Answer to the Questions
o Questions 3:
c. Out of six paths to create blue oceans, which was (were) used to create
Zappos’ blue ocean?

o Answer:
6 paths to create blue oceans:
- Look across alternative industries
- Looks across strategic groups within industry
- Redefines the industry buyer group
- Looks across to complementary product and service offerings
- Rethinks the functional-emotional orientation of its industry
- Participates in shaping external trends over time

.Path that were used to create Zappos’s blue ocean are highlighted in bold.

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 Answer to the Questions
o Questions 5:
5. How did Zappos break the existing value-cost trade-off of the
conventional online shoe store?

o Answer:
Zappos offers different value proposition that other online shoe retailing. It
offers excellent customer service. In fact the called themselves as a service
company instead of online shoe company. Offering excellence customer
service does not mean that Zappos has to drastically increase the retail prices
of their shoes while increasing the value through customer service. This broke
the existing value-cost trade-off often created in the red ocean strategy
because the did not lower the price and reduce the quality of their service or
product. Zappos offers great service at a reasonable price for their customers.
Customer service created and retained a large loyal customer base often lead
to repeat order and advocates the company.

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THANK YOU
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