Zappos Case Study

Presented by:Prathamesh DabhekarPrince NagariaRakshita AgrawalShuaib Raza Shaikh

INTRODUCTION

• Tony Hsieh is the CEO of the e-commerce powerhouse called Zappos.com. He helped to start the company in 1999 as an online shoe store, and it has since expanded to all manner of other goods

• The main purpose of Zappos.com: • Making customers happy • Emphasis on company culture

CORE COMPETENCIES• Passion to deliver extraordinary customer service – “WOW”

• “Surprise” upgrades to overnight shipping• Strong culture- uses its culture as a reason to hire and fire people• Intensive employee training• Loyal customer base• Working environment• Designing of exact size, shade and style of shoes• Leading online merchant of shoes

SOURCE OF COMPETITIVE ADVANTAGE

• Capital raising to give best product to consumers• Financial success• Corporate culture and values of company• Fit and return policy f the company• Online information about the product• Free, rapid delivery• The Zappos call center(24*7)• Attracting brands of product

WEAKNESS

• Scheduling deliveries from its suppliers to distribution center

• Traffic management difficulties

• Less visibility amongst manufacturers

• No instant gratification

OPPORTUNITIES

• Expand services in International market

• Launch new product lines to reduce dependency which generates 80% sales of company

• Widespread use of Smartphone – Online reach increases

THREATS

• Increase in cyber crime rates

• Intense competition with online competitors like Amazon

• Brick and Mortar stores

SUPPLY CHAIN MANAGEMENT

SUPPLY CHAIN MANAGEMENT

SHIPMENT• Air shipment is crucial for the company to deliver on its value

proposition in order to ensure a superior customer value and experience.

• The extra cost incurred by the firm to ensure timely delivery of goods to customers is justifiable as it helps the company to WOW the customers.

• In the late 2008, the above strategy might not hold good for the company to ensure profits. As a result, the company should deliver goods within one working day. As a result, the company can save on the extra costs incurred on the weekends.

EXPANSION PLAN

• The best way to expand the business is by adding more products as the potential of the home market is way too high.

EXPANSION PLAN

• Expansion by selling private labels or more geographies is not a feasible option.

Cost of setting up distribution & call centres in new geographies is not feasible for the firm

Effects of cost conscious consumer environment

• Minimal effects of a cost conscious consumer environment• Usage of the feedback facility for both positives as well as

negatives• Most of the consumers have given positive feedbacks• Overall the business is not being affected because most of

the consumers have given positive feedback

Maintaining the sales growth: Methods

• Increasing sales, but decreasing margins to reduce costs

• Stick to the core competency of service delivery• Invest time and money to discover the unmet

consumer needs• Explore possible alternatives like selective

discounts• Make exclusive deals with suppliers and offer

cheaper shoes through their affiliated sites like 6pm

Issue• Inefficient inbound supply chainUneven inbound deliveries - some days high to the point of causing

traffic problems, and on other days [relatively] low, leaving inventory staff waiting idly.

Lengthy uncoordinated inbound supply chain that requires many stops along the way before the products finally reach the Zappos fulfillment center

Most of their current inventory deliveries arrive as less-than-truckload shipments further aggravates the traffic issues on-site.

Scheduling

• Gradually tighten delivery window

• Supplier inform Zappos when their shipments are en route

• Expand inventory acceptance

Consolidation

• Broken down into two sections: international and domestic

• Consolidate inventory from the manufacturers directly - reducing the shipment cost

• Consolidate the multiple LTL shipments from these supplier clusters

New Fulfillment Centre

• Add an additional fulfillment center either near the port and the suppliers, in Ontario, California or further inland near Salt Lake City, Utah

• Inbound transportation costs are affected by how far the products must travel from the suppliers to the new facility

Alternative Solutions

Recommendation• By opening a new fulfillment center, Zappos will reduce congestion Will reduce domestic shipping distances for the large supplier baseWill improve customer service for customers in the western United States• Second option Consolidation increases efficiency of the inbound supply

chain and is a good procedure, but it has limitations is plagued with non-controllable variability adds a significant inventory carrying

Thank You