Zappos started off as a shoe-selling company in 1999. Slightly over 22 years later, the company prides itself on having more than 1500 employees. Over the years, Zappos has become a billion-dollar enterprise, scaling up from shoes to accessories, clothing, and handbags. 10 years after its inception, the company entered into a merger with Amazon, unarguably the king of e-Commerce in the world, especially in terms of revenue.
Zappos – At a Glance
|Chief Executive Officer (C.E.O.)||Scott Schaefer|
|Headquarters||Las Vegas, Nevada, U.S.|
|Year Founded||July 12, 1999|
|Type of company||Retail|
|Revenues (FY 2015)||$612.4M|
|Key Products/Services||Shoes, handbags, eyewear, accessories, clothing|
|Key Competitors||Hershey Chocolate World, Trend Nation, Boulder Boats, Lionesse Beauty, Refreshed Shoe Cleaner,|
Strong ties with Customers
The numerous case studies that have been carried out on the customer experience at Zappos points out at a business that values its customers. The business appreciates that at the heart of its success are the customers, with whom the employees and other stakeholders have mastered the art of interaction. This kind of obsession with customers has seen the business establish long-term relationships with both old and new customers.
Conducive work environment
Workplace culture is critical for any organization. It is what makes the workers and their customers develop a positive or negative attitude, which in the end, determines whether they enjoy associating with a business or not. At Zappos, workers are treated to a family spirit that is both weird and fun. This goes a long way in making sure that the workers are ever motivated and pleased to report to work. In any conducive work environment, customers feel safe and are more often than not happy to continue associating with the business.
Zappos prides itself in the strength of its brand image, which is hailed by customers from all walks of life for its corporate culture and best customer service, among others. New employees are usually treated to a period of training, during which they are inducted into the core values of the business. Additionally, the trainees are taken through a two-week period, where they interact with customers through phone calls. This builds their relationship with the customers, in whose minds the friendliness of the company is deeply engraved.
Social Corporation Responsibility
Zappos has always been at the forefront of extending its charitable arm in society. The business is known for supplying foodstuffs to low-income schools, thus impacting the education sector and putting a smile, and giving hope to many. Additionally, Zappos has been taking an active role in adopting more than 30,000 pets, besides giving supplies and clothing, as well as holiday dinners for thousands of people.
The Amazon Merger
A merger between two companies with very distinct organizational cultures comes with a host of challenges. Although traditionally, the bigger company absorbs the smaller one, this did not happen in the case of Zappos and Amazon, with each one of them keen on maintaining a significant sense of independence after the merger. In so doing, their deep-rooted organizational culture of communication is on the brink of collapsing. On the other hand, their customers would certainly be hit hard. This is because the loyalty of many customers is absolute, and it becomes almost difficult to transfer the same level of trust and loyalty to a merger, a position that may bring sales down.
Breach of Data
The technical hitch of 2012 that saw the company lose customers’ personal information to hackers left a dent in the company. When customers get to learn that their numbers, names, and addresses are in the hands of unauthorized persons, it leads to an almost natural withdrawal. It is this withdrawal that negatively impacts the number of sales and, eventually, the annual revenue and profit margin of the business. Even so, the company has remained under regular supervision on matters of data security, which may eventually go a long way in restoring some level of trust.
One of the probable reasons why the annual revenue for Zappos has not been as high as expected would its over-dependence on the local market. The majority of the market shares of the company are estimated at more than 90% for the United States of America alone. Other regions where Zappos has registered its presence include the Republic of Korea, the United Kingdom, and Canada, all of which have less than a combined 2%. If the company has to think about sustainability, there is a need to rethink the expansion strategy.
Consider expansion to the rest of the world
With more than 90% of its presence and great revenue from the American market, Zappos has every opportunity to double or even triple its revenue by seeking to expand to the rest of the world. Having established its presence already in Korea, the United Kingdom, Canada, and Mexico, the company only needs to appreciate that these regions have ripe markets. Zappos, therefore, needs to seriously consider up-scaling in these regions in which it already operates. This should gradually be followed by tapping the potential in new markets like Asia and Africa.
Introduction of new products
The up-scaling of the company should consider looking beyond the sale of shoes, which has been the company’s key product, besides accessories, clothing, and bags. The management needs to come up with a diversification program and start thinking of other products like outdoor gear and sports gear. Riding on their already big brand in the market and possible expansion to new markets, new products may become a major turning point for the business’ presence in the market, and of course, in terms of revenue.
Economic instability in the World
The recent days have not been very good news to businesses around the world, and the ongoing conflict between Russia and Ukraine has not helped the matter either. The war has seen the global economy pay a heavy price, with a rapid increase in the prices of various products being witnessed. The most obvious economic hurdle is that many people have gradually altogether lost or weakened their financial muscles, thus reducing their purchasing power. This translates to reduced revenue and narrower profit margins for Zappos.
With a significant majority taking their businesses online, existing and potential customers have wider freedom of choice, giving the competition for Zappos an excellent opportunity to take a fair share of Zappos’ existing customers. New entrants in the markets have equally stormed the online space, further threatening Zappos because of the expanded scope of varied tastes and preferences. The company has to work harder to remain relevant in the market and even to retain its existing customers. While at it, the company should up its game in social media platforms in a bid to suppress the impact of its competition.
In spite of the weaknesses and threats, the company should focus on its strengths and continue to keep both employees and customers happy. This will give them an upper hand in tapping the opportunities that come their way and navigating the stormy waters emanating from regional and global economic hardships.