Zappos Case free essay sample

Source of competitive advantage: Capital raising to give best product to customers; Financial success; Delightful customer services to wow customers; Faster web interface and extensive online product information; Well Trained call center operators offers a 24 ours toll-free call number; An evolutionary operation model; Free and 365 days allowance return policy; Attracting brands of products; sub brands to target different customers; Culture: Its core competencies are developed based on the corporate culture and in return its competencies and source of competitive advantages enable Capos to maintain its culture.Capos culture are as following: 1. Deliver WOW through service 2. Embrace and drive change 3. Create fun and a little weirdness 4. Be adventurous, creative and open minded 5. Pursue growth and learning 6. Build open and hoses relationship with communication 7. Build a positive team and family spirit 8. Do more with less 9. Be passionate and determined 10. Be humble The culture played an important rule in new employee hiring decisions, in training, and is reinforced by everyday actions throughout the organization. We will write a custom essay sample on Zappos Case or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page For example, the culture of delivering wow through service makes capos focus on providing exceptional customer services; the culture of embracing and driving changing makes capos a leading position in this industry; the culture of being adventurous, creative and open minded drives its evolution of the operating model; when interviewing experts for senior positions, if the circuit exhibited excessive ego or superiority, that person would not be hired. 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? Offering rapid delivery at no additional charge is a good way to provide exceptional service to WOW customers. Capos always try to beat customer potential, under-promising and over- delivering. Ultimately, this meant operating the warehouse in the evening would usually be delivered the next day, even though the standard delivery arms were for UPS ground, which had a 4-5 day delivery expectation.The customer experience regarding this shipment which delivers their products to them only in one day is awesome and they feedback wow to the company. However, when Capos guaranteed next-day delivery for all orders during the 2006 holiday season and 2007, customer satisfaction reduced. Since they expect the delivery to arrive in the next day, they were no longer as wowed as before, when it was a surprise upgrade. Furthermore, guaranteeing next day delivery set customers up for disappointment on those rare occasions when the deliverance was late due to inevitable problems.So Capos decided to no longer promise the next delivery, but still offer the same service. Customer satisfaction increased again as they receive their shoes earlier than they expected. As capos continued to increase delivery speed, shipping cost as a percentage of net sales remained constant. And by 2008, capos was one of the top three UPS overnight shippers. In this case, Capos is able to get more satisfied customer and more word of mouth, with the expectation of sales increase.The next day air shipment seems to worth the cost. In 2008, customers become more price conscious because of economic down. If capos decided to back off from its desire to ship all orders for overnight delivery, for instance, using ground delivery for all customers that Were within a twit-day delivery from its warehouse, it estimated that savings could be significant. As we can see in Exhibit 5, Capos have a very high level of gross margin(35%) but relative low operating income (3. 4%).If we reduce the cost of overnight delivery, we can expect the operating income will be higher. In addition, because customer are so price-sensitive in 2008, Capos might want to save the cost from overnight shipping and may be WOW its customer with some price related strategies. For example, a lucky price reduction after a customer has purchased an item or a lucky voucher shipped with their shoes for next purchase. 3. How would you expand the business? Would you add more product, 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? Considering the challenges faced by capos in 2008, I would recommend capos to add more products. So Capos will expand the business still giving a best quality to the customer with the immediate speedy delivery, superior customer service for better feedback. There are 4 reasons why I think Capos will succeed by selling more products like cloths and accessories.Brand equity and customer base: Capos has successfully built a positive brand image among customers with a large customer base (about 3% of US population) Evolutionary operation system and other inventories like call center : This system is one of the most completive advantages Capos have developed. It enabled Capos to deliver WOW not only to customer but also to brands and its employees and keep the cost low at the same time. The culture of Capos The experience learned from doing shoes business. Recommend the following investment in order to expand with new products.There will be some additional cost occur to Capos, but they are expected to be covered by higher revenue. Recruit people with experience previously on expanded products like cloths and accessories. They need those new people both on operations and call center services. The right people will help capos to find good products and brands and forecast demand. Also, capos need to hire new people and train old people in call centers, so that customer will be ell served when they have some questions about closes or accessories.Adjust their operation and inventory system to satisfy the need of managing new products. Although the new products will be in fashion industry just like shoes, the requirement for categories, stock and inventory are slightly different. Capos need to invest to make their existing system serve the new products. In this way, they will maintain a great customer satisfaction level at an lower average cost level because of scale of economics. They need to redesign the website and maybe insert a recommender system in order to aka a more convenient customer shopping experience.For example, if a customer chose a pair of shoes of certain style, capos may recommend a dress to match that shoe. In this way, we expect some old customers from shoes will switch to cloths as well. However, the recommender system can be complicated and expensive. In order to provide a superior customer experience, I recommend capos to provide some unique service to help customer to choose the right size online. For example, it can provide a service that members can fill in all the measures of their body, and the system will commend the right size for s/he based on the data they get from manufactures.In this way, the return rate is expected to decrease significantly. 4. How would you expect the environment of a more cost-conscious consumer to affect Capos business? What can Capos do in such an environment to maintain sales growth? Capos has the feedback facility to allow customer to write their review and comment. If the cost-conscious consumer are not satisfied with the price, we can tell from those feedback. If a lot of cost-conscious consumer stopped shopping at Capos, we can tell from the total sales.