Zappos - 1 Teaching Methods and Higher Education Minder Chen Associate Professor of MIS Chair of the Business and Economics Program Martin V. Smith School.

Zappos - 1

Teaching Methods and Higher EducationMinder Chen

Associate Professor of MISChair of the Business and Economics Program

Martin V. Smith School of Business and EconomicsCSU Channel Islands

[email protected] or [email protected] site: http://faculty.csuci.edu/minder.chen/

Course materials: http://faculty.csuci.edu/minder.chen/event/

Zappos - 2http://images.businessweek.com/ss/09/02/0219_customer_service/20.htm

Zappos - 3

Zappos

• Founded in 1999. • “A service company that just happens to sell

shoes.” - Tony Hsieh, CEO of Zappos• Zappos can cultivate a reputation for

outstanding customer service to the point where it, too, can become a springboard into several markets.

• It rang up a record $1 billion in sales in 2008. • Employees are referred to as “Zapponians”.

Zappos - 4

Customer Service Is Everything• At Zappos.com, Customer Service Is Everything.

In Fact, It's The Entire Company.• We've been asked by a lot of people how we've

grown so quickly, and the answer is actually really simple... We've aligned the entire organization around one mission: to provide the best customer service possible. Internally, we call this our WOW philosophy.

Zappos - 5

Case Study Questions• Why selling shoes online is not considered a good e-commerce idea?

• What policies Zappos have to make it easier for you to buy shoes online?

• Why changed Tony’s mind to invest in Zappos (shoesite.com)?

• Why were the challenges in the early stages of Zappos company history?

• Why Amazon acquired Zappos?

• Why Zappos moved its headquarter to Las Vegas?

• Why Zappos logistic center at

• Explain the meaning of Zappos’s culture and how it foster its culture

• What are the major differences between Amazon and Zappos?

• What are the unique approaches that Zappos have taken that are against traditional wisdom?

• “Carry less and sale more” (drop-ship) vs. “Carry all”

• Outsource call center vs. in-house call center

• How is the performance measured for call center employees?

Zappos - 6

Assignment Questions 1. What are Zappos’ core competencies and sources of competitive

advantage? How sustainable are they? What role does corporate culture play in these questions?

2. How important is next-day air shipment to the customer experience? Is it worth the cost? How might you change it in the cost-conscious environment facing the company in late 2008?

3. How would you expand the business? Would you add more products, more geographies, or by selling private labels? As you expand the business, how can the company become more profitable, particularly in light of the costs associated with the focus on service?

4. How would you expect the environment of a more cost-conscious consumer to affect Zappos’ business? What can Zappos do in such an environment to maintain sales growth?

Source: Stanford Graduate School of Business, Case GS-65, Teaching Notes

Zappos - 7

Zappos Core Values• Deliver WOW Through Service • Embrace and Drive Change • Create Fun and A Little Weirdness • Be Adventurous, Creative, and Open-Minded • Pursue Growth and Learning • Build Open and Honest Relationships with Communicatio

n

• Build a Positive Team and Family Spirit • Do More with Less • Be Passionate and Determined • Be Humble

Zappos - 8

10 rules for creating a customer-centric culture

1. Make customer service a priority for the whole company. 2. Make "wow" a part of your company' vocabulary. 3. Don't measure call times, and don't force agents to upsell. 4. Empower your customer service team. 5. Don't hide your toll-free number. 6. Have the entire company celebrate great service. 7. Create a culture book. 8. Find people who are passionate about customer service. 9. Give great service to everyone: customers, employees, and vendors. 10. Make customer service part of everyone's performance reviews.

Source: http://decker.typepad.com/welcome/2006/12/zappos_10_rules.html

Zappos - 9

Sold to Amazon• It was announced on July 22, 2009 that

Amazon.com would buy Zappos for $940 million in a stock and cash deal. Owners of shares of Zappos were set to receive approximately 10 million Amazon.com shares, and employees would receive a separate $40 million in cash and restricted stock units. The deal was eventually closed in November 2009 for a reported $1.2 billion.

• Softline vs. hardline goods

Zappos - 10

• 謝家華（左）與林君叡的辦公室根本連門都不設，頂上裝飾成熱帶雨林，還有猴子。 記者馮鳴台／攝影• Read more: 世界新聞網

Zappos - 11

Zappos - 12

Logo Design

Zappos - 13

Zappos - 14

Zappos - 15

Zappos - 16

Zappos - 17

Business Week Customer Service Champ• Consider No. 7, Zappos.com, the online shoe retailer whose devoted

fans rave about its free shipping on both orders and returns. The retailer had typically upgraded both first-time and repeat customers to overnight shipping even though it wasn't advertising that perk.

• But starting in 2009, Zappos will no longer offer overnight upgrades to first-time visitors. Instead, CEO Tony Hsieh is moving those dollars into a new VIP service for Zappos' most loyal shoppers. Launched in December, the site, which for now can only be accessed by loyal customers who receive an invitation, promises overnight shipping and plans to offer earlier access to sales and new merchandise than the plain-vanilla site. (Repeat customers who aren't yet asked to join the VIP service will continue getting the overnight upgrade for now.) “

• We decided we wanted to invest more in repeat customers," says Hsieh. "We're shifting some of the costs that would have gone into new customers."

http://www.businessweek.com/print/magazine/content/09_09/b4121026559235.htm

Zappos - 18

The service is the product/brand.

• Shoes are commodities. Any the same shoes you buy at Zappos can be bought at ten other online shoe stores.

• The reason Zappos succeeds is that they are adding value to otherwise indiscernible products. The service is the product.

Zappos - 19

A Package from Zappos

Zappos - 20

Happiness

Zappos - 21

Zappos - 22