ZAPPOS.COM 2009: Clothing, Customer Service, and Company Culture
Business strategy and model: Zappos.com had a differentiation strategy with which they had differentiated themselves from the rest of the market. They had use a unique corporate culture in their company which was one of the major competitive edges of the company. According to the CEO of the company, Tony Hsieh, that everything that they had done at Zappos such as their relationships with 1,200 to 1,500 brands, policies and website style could be copied, however, the only thing that no one could copy from them was their unique culture. Zappos had 10 unique core values as a basis of their ...view middle of the document...
For organizational goals employees were bound to follow the core values of the company, they were offering a paid training period to their employees to help them relate the company’s strategies with core values and mission as well as they were also encouraging team work and socializing them inside the company.
SWOT analysis (Exhibit 1) - Strengths: The biggest strength of Zappos was its lucrative and unique culture that was motivating teamwork, socializing, effective communication and recognition of high performers. The company was highly open to innovation and therefore, their product portfolio was based on unique products. They had a very strong customer service system that usually turns into personal conversation because they could easily satisfy their customers by providing them full attention and assistance. They had low fixed costs, high quality shipping services and had built a strong brand image. They had 75% repeat customers ratio showing a high rate of customer loyalty.
Weaknesses: In 2008, the company had net revenues of $635,011 million, but the net income was in loss showing its high costs in different categories. The company had neglected the importance of costs and had focused on the improvement of quality of services and products. They had spent openly on advertising which was a bad decision as their profits were almost nil.
Opportunities: They could reduce their costs by developing a quality control cell as well as by reducing call times. In some regions of the US they could offer free shipping which would improve their reputation and would increase their customers. They should offer lower prices as compared to the physical markets and should offer a comparison of prices on their site to attract more customers. Merger with Amazon.com could increase the market share of Amazon and would strengthen the position and financial condition of Zappos.
Threats: Changes in government policies and environmental conditions could directly affect their business. Changes in customer’s choices and behaviors could also threaten the performance of the company in the long run. The wages of their employees were low that were $14-$15 per hour for CLT members and $8.25 for warehouse workers. Although they were offering some additional and very unique incentive to their customers, but still there was a threat of losing their employees due to low wages.
Evaluate HR practices and culture: Zappos had a strong and competent culture as well as HR practices which had contributed astonishingly to the growth and success of the company. The HR practices of the company were following the culture of the company that was based on 10 core values (Exhibit 2). The hiring and firing were also based on the “culture fit” of the candidates. The recruiting officers were asking questions about each of their core values and a candidate who had scored either very high or very low was not considered as a good fit for the organization. Although, the company had achieved...