2. 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
3. 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
4. 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
5. WEAKNESS
• Scheduling deliveries from its suppliers to distribution center
• Traffic management difficulties
• Less visibility amongst manufacturers
• No instant gratification
6. 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
7. THREATS
• Increase in cyber crime rates
• Intense competition with online competitors like Amazon
• Brick and Mortar stores
10. 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.
11. 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.
12. 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
13. 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
14. 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
15. Issue
• Inefficient inbound supply chain
Uneven 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.
16. 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
17. Recommendation
• By opening a new fulfillment center,
Zappos will reduce congestion
Will reduce domestic shipping distances for the large supplier base
Will 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
