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Case study: Zappos

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By Winter Nie and Beverley Lennox

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Since the online shoe retailer was founded in 1999, the Zappos brand has extolled its “wow” customer service positioning and a distinct corporate culture.

The challenge.

Tony Hsieh, the chief executive, became a multimillionaire at 24 when he sold a start-up he had co-founded to Microsoft for $265m. After joining Zappos as an adviser and investor, he eventually became chief executive. When Mr Hsieh got involved in 1999, annual gross sales were $1.6m. He had two goals for the first 10 years: reach $1bn in annual sales and get on the list of best companies to work for.

Culture rules.

For Mr Hsieh, company culture came first in order to maintain passion and excitement.

The Zappos culture was shaped by 10 core values on which it hired and fired. While Zappos had a playful side, with values such as “create fun and a little weirdness”, it pushed performance just as hard with values such as “do more with less”, and “deliver ‘wow’ through service”.

Zappos also had an unusual recruitment process involving two interviews – one to assess fit with the job and another to assess cultural fit with the company.

All successful recruits had the same five-week training, including two weeks on the phones in the call-centre. Topics included the emphasis on customer service and the philosophy behind company culture. Everyone was offered $2,000 to quit as a test of enthusiasm.

Clear communications.

Transparency in dealing with employees, suppliers, investors and customers was a central tenet. In late 2008, Zappos shed 8 per cent of its workforce. Rather than spinning it as strategic, Mr Hsieh sent a detailed e-mail to staff on what was happening and why. He also put the e-mail on his blog so even outsiders had access to the details at the same time.

Mr Hsieh viewed culture- building as an investment. The values, benefits and freedom that went with it had resulted in a high-energy workplace. Customer service calls could take an hour, but that was considered as a marketing expense because customers who had a good experience would tell friends.

Adapting the service model.

Customer service was a core element of the culture. Its free-call number, free shipping and returns, 365-day return policy and 24/7 availability also set it apart. Zappos employees had no scripts or call-time metrics, and were empowered to take action to make customers happy.

Initially, Zappos relied on a “drop-ship” model, whereby the supplier sent the shoes to the customer directly on receipt of information from Zappos, but orders were too often delayed or lost. So Mr Hsieh switched to an inventory model and invested in a distribution facility, which greatly helped Zappos deliver on its brand promise.

Another success factor was its relationships with vendors. Zappos built collaborative partnerships and shared information with vendors in an open and transparent way. They were able to see inventory levels, sales and profitability, and they helped Zappos plan its business and made sure they had the right product at the right time.

The results.

By 2008, the company hit its goal of $1bn in gross sales and in 2009 Fortune magazine ranked Zappos 23rd on its list of the best companies to work for. Zappos expanded into clothes and other categories where customer service could be a differentiator.

Then Zappos was sold to Amazon in late 2009 for $1.2bn. Mr Hsieh reassured employees and others that it would be business as usual. Today, Zappos still operates as an independent entity with its brand and culture intact.

The lessons.

The combination of corporate culture, customer service and supply chain make Zappos stand apart.

The organisation lives and breathes customer service, which stems from its unique corporate culture.

Zappos understands it must recruit people who can deliver customer service. As well taking care to hire the right employees, it provides every recruit with the same basic training.

It not only focuses on customer experience at the front end, but delivers its promise from the back end. It changed its business model from asset-light to fixed-asset investment to deliver its promised “wow” experience.

The writers are, respectively, professor of operations and service management and a researcher at IMD

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International Edition

Business case study

Business Case Study: Zappos, A Success Story of Customer Service, Culture & Holocracy

Zappos: a case study in building a successful business, introduction:.

Zappos, an online shoe retailer, has become a household name in the world of e-commerce. Founded in 1999, the company has gone on to achieve great success, attracting attention from business experts and industry leaders alike. This case study will examine Zappos’ journey from its early days to its current status as one of the most successful e-commerce companies in the world.

Market Condition and Opportunities:

When Zappos first entered the market, the e-commerce industry was still in its infancy. Despite this, the company saw a huge opportunity in the online retail sector, particularly for shoes. At the time, most online retailers were still focused on books, music, and electronics. Zappos saw an opportunity to differentiate itself by focusing solely on shoes, offering a vast selection and outstanding customer service.

Early Wins:

Zappos' first few wins were a result of its focus on customer service and its unique company culture. The company's commitment to providing the best possible customer experience, combined with its willingness to take risks and try new things, helped it stand out in a crowded market. For example, Zappos was one of the first companies to offer free shipping and free returns, which helped to build customer loyalty. Additionally, the company's focus on employee happiness and well-being helped to create a positive working environment and contributed to its success.

Management Decisions:

Zappos' management team made a number of key decisions that helped the company achieve its early wins and reach new heights. One of the most important was its decision to focus on customer service and create a unique company culture. The company also made strategic investments in technology and marketing, which helped to build its brand and reach new customers. Additionally, Zappos was able to attract top talent by offering competitive salaries and benefits, as well as creating a positive and supportive work environment.

Secret Sauce:

Zappos' secret sauce for early success was its focus on customer service and its unique company culture. The company's commitment to providing the best possible customer experience, combined with its willingness to take risks and try new things, helped it stand out in a crowded market. Additionally, Zappos' focus on employee happiness and well-being helped to create a positive working environment and contributed to its success.

One famous story that showcases Zappos' commitment to customer service is when a customer called in to purchase a pair of shoes for her wedding, but the shoes did not arrive in time for the event. The customer service representative she spoke with went above and beyond and overnighted her a new pair of shoes, at no extra charge, so that she would have them in time for her wedding. The customer was so impressed with the level of service she received that she shared her story online, and it quickly went viral, bringing a lot of positive attention to the company.

Another example of Zappos' commitment to customer service is their "WOW" philosophy, which states that employees should do whatever it takes to make the customer happy, even if that means going above and beyond what is expected. This philosophy has led to many memorable moments for customers, such as a customer service representative spending over two hours on the phone with a customer, helping them find the perfect pair of shoes.

Capitalizing on Early Wins:

Zappos was able to capitalize on its early wins by expanding its product offerings and improving its website. The company also made strategic investments in technology and marketing, which helped to build its brand and reach new customers. Additionally, Zappos continued to focus on customer service and employee happiness, which helped to maintain its competitive advantage.

Scaling the Company:

Zappos was able to scale its business by expanding its product offerings and improving its website. The company also made strategic investments in technology and marketing, which helped to build its brand and reach new customers. Additionally, Zappos continued to focus on customer service and employee happiness, which helped to maintain its competitive advantage.

Sustaining Competition and Economic Times:

Zappos faced intense competition from established players in the online retail space such as Amazon, but the company found its unique selling proposition in its company culture and customer service. Zappos focused on providing an exceptional customer experience through fast and free shipping, a 365-day return policy, and 24/7 customer service. This differentiation strategy allowed Zappos to stand out in a crowded marketplace and to continue to grow despite the 2008 economic downturn.

In 2009, Zappos was acquired by Amazon for $1.2 billion, but the company continued to operate as an independent subsidiary. The acquisition allowed Zappos to leverage Amazon's resources to further expand its reach, but the company remained true to its roots and continued to prioritize its unique company culture and customer-focused approach.

Unique Approach to Management and Organizational Structure

Zappos adopted a unique management style called Holocracy in 2013, which aimed to eliminate traditional hierarchical structures and promote self-governance. This innovative approach aimed to empower employees and encourage them to take ownership of their work. Instead of traditional job titles, employees were organized into autonomous teams and given the freedom to make decisions that impacted their work. This allowed Zappos to foster a culture of creativity and innovation, where employees were encouraged to think outside the box and come up with new and innovative solutions. The results were significant, with increased employee engagement, improved productivity, and a more streamlined decision-making process. Holocracy also helped Zappos stay true to its core values of putting the customer first and promoting a fun, quirky and engaging workplace culture. To this day, Zappos continues to be a leader in adopting alternative management styles and continues to be a case study for businesses looking to promote employee engagement and organizational efficiency.

The Fundraising Journey of Zappos:

Zappos is known for its quirky and unique approach to business, and that extends to the way they raised funds for the company. In the early days, Nick Swinmurn, the founder of Zappos, had a tough time raising funds for his startup. But he eventually found success by approaching Tony Hsieh, a successful entrepreneur, who invested in Zappos in 1999. Hsieh was impressed with Swinmurn's vision and the potential of the company, and he saw the opportunity to apply his own experience in online marketing to help grow the business.

Zappos continued to raise funds through later rounds, including a Series C round led by Sequoia Capital, which brought in $35 million in 2004. This funding allowed the company to invest in infrastructure, marketing, and growth initiatives.

One interesting story about Zappos' fundraising efforts is the company's decision to turn down a $200 million offer from Amazon in 2000. Zappos' leadership team saw the potential for the company to become much bigger than what Amazon was offering, and they decided to go it alone. This decision proved to be a wise one, as Zappos continued to grow and eventually sold to Amazon in 2009 for a whopping $1.2 billion.

This story highlights the importance of vision and the willingness to take calculated risks in business. Zappos' leadership team believed in their vision and took a bold move by turning down a large sum of money in order to achieve their long-term goals. This decision was a testament to the company's commitment to building a unique and successful brand, and it helped lay the foundation for Zappos' success as a company.

Actionable Takeaways:

  • Prioritize company culture and customer experience to create a sustainable competitive advantage.
  • Leverage technology and resources to expand reach, but remain true to company values and approach.
  • Continuously innovate and experiment to stay ahead of the curve.
  • In conclusion, Zappos' success story serves as a shining example of what can be achieved through a customer-focused, culture-driven approach. By following in the footsteps of Zappos, companies can position themselves for long-term success and create a positive impact on their customers and employees.

"10 Things Every Business Student Should Learn From Zappos"

Zappos, the online shoe and clothing retailer, has become a leader in the e-commerce industry through its innovative and customer-centric approach to business. As a former advisor at Y Combinator, I have seen firsthand how Zappos’ success can be a valuable source of inspiration and learning for business students. Here are 10 things that every business student should learn from Zappos:

  • Customer Service is KeyZappos’ commitment to providing exceptional customer service sets it apart from its competitors. The company’s approach to customer service is so unique that it is often cited as the primary reason for its success. For example, Zappos’ call center employees are empowered to do whatever it takes to satisfy customers, even if that means spending hours on the phone with a single customer.
  • Embrace Culture and ValuesZappos’ company culture and values are central to its success. The company places a strong emphasis on creating a positive and enjoyable work environment, and it encourages employees to be themselves and have fun at work. This has resulted in a team of highly motivated and engaged employees who are committed to delivering exceptional customer service.
  • Prioritize Employee HappinessZappos recognizes the importance of employee happiness in driving business success. The company has implemented a number of programs and initiatives designed to promote employee wellbeing, including a “Paid Time Off” program, which allows employees to take paid time off whenever they need it. This has resulted in a highly motivated and engaged workforce that is committed to delivering outstanding customer service.
  • Innovate ContinuouslyZappos has a culture of innovation and is always looking for ways to improve its products and services. The company regularly launches new initiatives and experiments with new business models, which has allowed it to stay ahead of its competitors and maintain its position as an industry leader.
  • Focus on People, Not Just ProductsZappos’ success is built on its focus on people, not just products. The company places a strong emphasis on building relationships with its customers, employees, and partners, which has helped it to create a loyal and engaged customer base.
  • Encourage Employee EmpowermentZappos empowers its employees to make decisions and take risks, which has helped to foster a culture of innovation and creativity. The company encourages its employees to share their ideas and provides them with the resources and support they need to bring their ideas to life.
  • Foster a Sense of CommunityZappos has a strong sense of community and encourages its employees, customers, and partners to engage with one another. This has helped to create a loyal customer base and a positive company culture, which are key to its success.
  • Lead with PurposeZappos is driven by a clear sense of purpose, which is to deliver happiness to its customers, employees, and partners. This purpose guides all of the company’s decision-making and helps to keep it focused on its goals.
  • Embrace FailureZappos recognizes the value of failure and encourages its employees to take risks and embrace failure as a learning opportunity. This has helped the company to innovate and continuously improve its products and services.
  • Focus on Long-Term GrowthZappos is focused on long-term growth and has a long-term perspective on its business. This has helped it to weather economic downturns and remain competitive in a rapidly changing industry.

In conclusion, Zappos success is a result of its innovative and customer-centric approach to business. From its commitment to exceptional customer service, to its focus on employee happiness and empowerment, to its continuous innovation, Zappos is a valuable source of inspiration for business students. By incorporating these lessons into their own approach to business, students can build successful companies that are driven by purpose, innovation, and a focus on people.

“The author generated this text in part with GPT-3, OpenAI’s large-scale language-generation model. Upon generating draft language, the author reviewed, edited, and revised the language to their own liking and takes ultimate responsibility for the content of this publication.”

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Zappos.com 2009: Clothing, Customer Service, and Company Culture

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case study of zappos

Frances X. Frei

case study of zappos

Robin J. Ely

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Zappos and the Connection Between Structure and Strategy

  • Juan Pablo Vazquez Sampere

When it comes to holacracy, you don’t know the whole story.

Leaders of large enterprises struggle to balance the need to make their core business more efficient with the need to move nimbly to new processes and business models, particularly in the face of threats from disruptive startups. This is a fact we know, and know well.

case study of zappos

  • Juan Pablo Vazquez Sampere is a professor of business administration at IE Business School.

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case study of zappos

Using AWS services as building blocks allows engineers to focus on improving performance and results rather than DevOps overhead."

Ameen Kazerouni Head of Machine Learning Research and Platforms, Zappos

Searching for the Perfect Fit

Zappos knows that providing accurate recommendations is key to an efficient shopping experience. The company reassures customers with its generous return policy and fast and free shipping, but these offerings are both expensive and undifferentiated.

“We are always asking ourselves: how do we differentiate further?” says Kazerouni. “How do we optimize return rates without negatively affecting the customer experience? These are the problems we set out to solve using machine learning and analytics on AWS.”

In the search phase of the customer journey, the company’s goal was to make personalized recommendations at runtime to increase search relevance. Rather than using a generic search algorithm, Zappos seeks to understand customers personally and provide a unique set of search results for a given term. (It also prominently displays an opt-out button for customers who do not want this level of personalization.)

At the same time, it can’t afford to slow down search performance noticeably. “We needed to minimize the amount of time the extra operations take,” notes Kazerouni. “So we combine high-performance caching, strategic precalculation of certain results, and ensemble-based machine learning approaches that use multiple, simple models.”

More Than the Sum of Its Parts

The data pipeline starts with a lightweight client sending relevant events to an ingestion API for processing. The API sits in an auto-scaling group to handle high volumes of data. From the API, the data is sent to Amazon Data Firehose for ingestion into an Amazon Redshift data warehouse that provides high-performance data access for machine learning research. Amazon Simple Storage Service (Amazon S3) is the intermediary between Amazon Data Firehose and Amazon Redshift.

Zappos uses several technologies for training and running models. It relies on Amazon SageMaker to predict customer apparel sizes. These predictions are cached and then exposed at runtime via microservices APIs for use in recommendations. Zappos uses Amazon EMR to run big data analytics for a fraction of the cost of traditional on-premises clusters. It also runs models using graphical processing units (GPUs) on Amazon Elastic Compute Cloud (Amazon EC2).

The company enables ultrafast lookup of precomputed predictions using two distinct services. Amazon DynamoDB stores precomputed results that will be accessed at runtime. This fully managed key-value and document database delivers single-digit millisecond performance at almost any scale. It can handle more than 10 trillion requests a day and can support peaks of more than 20 million requests per second. For even faster response times, Zappos takes advantage of Amazon ElastiCache for Redis , an in-memory data store, as a cache layer. This service ensures sub-millisecond latency when needed.

The microservices that run models and consolidate results run on Amazon EC2 instances arranged in auto-scaling groups with location-based load balancers. Zappos uses Amazon Route 53 as the domain name system, routing traffic throughout the solution.

Run, Don’t Walk

Creating and maintaining this intricate architecture with traditional development and deployment methods would be prohibitively complex. Instead, Zappos relies on infrastructure as code using AWS CloudFormation . “Every aspect of the solution is represented in AWS CloudFormation templates,” reports Kazerouni. “To make a change, we just tweak the template. If we need to fix the way the services communicate with Redis, we don’t repeat the change manually—we change the template and deploy it everywhere.”

He notes that it would be impossible to build the solution without the wealth of AWS services at the team’s command. “Using AWS services as building blocks allows engineers to focus on improving performance and results rather than DevOps overhead.”

Customers Feel the Love

Zappos delivered these improved search results to customers with a nearly undetectable increase in latency, with 99 percent of searches completed in less than 48 milliseconds. By using a similar architecture, it has also significantly improved personalized sizing recommendations based on simple fit surveys and past purchases. As a result, the company has reduced repeated searches and product returns. It has also achieved higher search-to-product-clickthrough rates and raised the position of customer selections in search results.

As Kazerouni sums it up, “We think of ourselves as a customer service company that happens to sell shoes and apparel. Anything we can do that improves service improves our business. Using AWS makes it possible for us to innovate the experience faster.”

To learn more, visit aws.amazon.com/big-data/datalakes-and-analytics .

About Zappos

Zappos began 20 years ago as a small, online shoe retailer. Since then, it has grown to sell clothing, handbags, accessories, and more while providing renowned customer service and innovative employee experiences. The company has been a subsidiary of Amazon since 2009.

Benefits of AWS

  • Keeps search latency below 48 milliseconds for 99% of searches
  • Personalizes searches for better customer experience
  • Achieves higher search-to-clickthrough rates
  • Gets fewer returns due to improved sizing recommendations

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Easily run and scale Apache Spark, Hadoop, HBase, Presto, Hive, and other big data frameworks.

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Amazon Data Firehose

Amazon Data Firehose is the easiest way to reliably load streaming data into data lakes, data stores and analytics tools.

Amazon SageMaker

Amazon SageMaker is a fully managed service that provides every developer and data scientist with the ability to build, train, and deploy machine learning (ML) models quickly. SageMaker removes the heavy lifting from each step of the machine learning process to make it easier to develop high quality models.

Amazon Redshift

Redshift powers analytical workloads for Fortune 500 companies, startups, and everything in between. Companies like Lyft have grown with Redshift from startups to multi-billion dollar enterprises.

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Technology and Operations Management

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Zappos: Delivering Happiness, Powered by Service

case study of zappos

A story of the unwavering focus on exceptional customer experience.. and the success that follows

As an online retailer, Zappos brings the in-store shopping experience to customers in their homes, initially with shoes, and now with a wide array of other products as well. The business model of Zappos is built on providing an exceptional customer experience, and in doing so, building customer loyalty and driving word-of-mouth marketing. [1]

A few key components of this customer promise include:

  • Free shipping and returns on all orders , regardless of order size, enabling customers to order multiple items to try on in the comfort of their own home
  • 365 Day Return Policy
  • 24/7 Customer Service

case study of zappos

While delivering happiness may be a competitive advantage, the cost of doing so is high. In 2008, 37% of purchases were returned ($379 million worth of goods) as a result of the lenient return policy. While some might balk at this number, Zappos views this expense as an investment in marketing, believing that happy customers are the best marketing channel. Indeed, Zappos has found success with this model, reaching over $1.1 billion in gross revenue by 2009, at which point it was acquired by Amazon. [4] Today, Zappos has annual revenue of well over $2 billion. [1]

[4]

Pathways to Just Digital Future

The success of this business model is the result of an effective alignment with its underlying operating model. The unwavering focus on service that we see in the business model is also the driving force behind many key operating decisions.

Operating Model

Inventory and Warehousing

When founded in 1999, Zappos was originally designed as a “middleman,” operating based on the “drop ship” model. It held no inventory and simply connected customer orders with manufacturers who filled the orders. In 2003, however, with many e-commerce companies going bust in the dot-com crash, Zappos decided to differentiate itself through providing exceptional customer service.  This was not possible under the drop ship model, as Zappos had no control over the delivery times of manufacturers and never had perfect visibility into their inventory. As a result, Zappos terminated its drop ship business and began buying inventory and storing it within their own warehouses. By moving the fulfillment of orders in-house, they could own the entire customer experience. [3],[4]

Call Center Operations

Relocation from SF to Vegas

Zappos understood that call center interactions were a critical part of customer service. However, when headquartered in San Francisco, it was difficult to find the right type of committed, service-oriented people with whom to staff its call centers. With its high cost of living and tech-heavy culture, the Bay Area was not a place where call center jobs were taken seriously. As a result, many of the call center employees were temps who did not deliver the desired level of quality. [4]

To address this issue, Zappos moved its headquarters to Las Vegas. In addition to its lower cost of living, Vegas was also chosen for its unique culture. As a city with a heavy emphasis on hospitality, its citizens were more likely to view a customer service job as a way to start a legitimate career. Furthermore, with the city’s pervasive “all-night” culture, people were more willing to work odd hours, enabling Zappos to provide a 24/7 customer service line. [4]

Emphasis on Quality Interactions

While other companies focus on reducing the issue resolution time on customer calls, Zappos does not limit the amount of time that customer representatives spend on the phone with each customer. Instead, Zappos encourages its employees to spend as much time as needed to really understand the customer’s issues and go above and beyond in helping the customer. To this end, Zappos also does not have a script for its call center reps, and encourages them to be authentic and build a personal emotional connection (PEC) with each customer. [4]

Looking Forward: Holacracy

As Zappos grows, it continues to look for new ways to stay innovative in optimizing the customer experience. Lately, this has taken the form of holacracy, a new organizational structure which eliminates bosses and comprises of many self-managed “circles.” The idea is to prevent the bottlenecks that come with bureaucracy and to structure Zappos more like an incubator in an attempt to attract talented employees with an entrepreneurial bent. [5],[6] Furthermore, as part of the holacracy structure, when a customer issue arises repeatedly, a different team is assigned to address it each time, resulting in the generation of many different innovative ideas for solving the problem. These ideas are then reviewed to develop a sustainable solution. [1] In doing this, Zappos widens the ideation phase of the design funnel in order to stay innovative in maximizing customer happiness.

Holacracy is a radical approach that isn’t for everyone though. Since its implementation last year, 14% of Zappos employees have already left as a result. [5] However, the long-term financial and cultural impact remain to be seen. For now, the one thing we do know is that Zappos remains as steadfast as ever in its commitment to delivering customer happiness.

[1] “Zappos and the Connection Between Structure and Strategy.” Harvard Business Review, June 3, 2015. < https://hbr.org/2015/06/zappos-and-the-connection-between-structure-and-strategy >

[2] Zappos website. Accessed Dec 9, 2015. < www.zappos.com >

[3] “Tony Hsieh: Redefining Zappos’ Business Model.” Bloomberg Business, May 27, 2010. < http://www.bloomberg.com/bw/magazine/content/10_23/b4181088591033.htm >

[4] “How I Did It: Zappos’s CEO on Going to Extremes for Customers.” Harvard Business Review, Jul-Aug 2010 issue. < https://hbr.org/2010/07/how-i-did-it-zapposs-ceo-on-going-to-extremes-for-customers >

[5] “Tony Hsieh got rid of bosses at Zappos – and that’s not even his biggest idea.” Washington Post, Dec 1, 2015. < https://www.washingtonpost.com/news/on-leadership/wp/2015/12/01/tony-hsieh-got-rid-of-bosses-at-zappos-and-thats-not-even-his-biggest-idea/ >

[6] “Zappos and the search for a better way to run a business.” Fortune, Jan 29, 2014. < http://fortune.com/2014/01/29/zappos-and-the-search-for-a-better-way-to-run-a-business/ >

Student comments on Zappos: Delivering Happiness, Powered by Service

So true – Zappos is king when it comes to customer service! After reading about the call center moving to Vegas, that decision makes a ton of sense. I wonder if other companies have followed suit to build up call center capabilities there because it seems of the unique culture there.

Also, I’m interested to know how the decision to focus on customer service has evolved over time. While Zappos has certainly earned itself a name on that competitive advantage, have consumer preferences changed over the years such that customer service is not always the top factor for purchasing online? In particular, retail over the past few years has become more and more a price play. Has that had any impact on how Zappos has had to compete to get purchases? It’d be an awesome and really powerful case study if Zappos has largely been immune to this trend!

Thanks for sharing Wendy! I’m glad you brought up the recent implementation of halocracy, as it does seem that it creates an incredible opportunity to develop new solutions to ideas. My question is how Zappos will maintain it’s current quality of service under this new operating structure? It seems like Managers are key for quality control and maintaining some semblance of best practices even if Personal Emotion Connection is a crucial piece of service. Will leaders still emerge without actual titles who will then drive their own agendas? Also, Amazon is known for it’s top down management model, how was Zappos able to convince their parent company that this change will improve satisfaction and drive growth?

I have personally been very impressed with Zappos and its culture with a strong focus on customer service. While at my last startup, we tried to learn a lot from Zappos’ customer service and gave agents a lot of freedom. What I would want to understand better is how do they maintain any sort of control over the call centre agents to prevent malpractices? Also, how does the model allow for disproportionate amount of spending over customer service?

Big time Zappos customer here – VIP member. It’s interesting to me that the retention rate fell once they implemented the new “circles” staffing model. Perhaps hospitality-minded people, focused on making customers feel satisfied, need the structure of a formal working environment with a manager, etc. to be productive. I’m curious to know if once they implemented this, did effectiveness at solving challenges decrease because people had to now work together in a less structured way more than before? Working well in teams and being successful in team-based problem solving are a different set of skills from the soft ones required to be good at customer service. In a way, people that work customer service at a place like Zappos (where time on the call isn’t important) likely involve a lot of personality into what they do – personality they likely feel is a critical part of they ability to do their job so effectively. When you tamper with that, it’s likely some employees will feel marginalized. Good article!

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case study of zappos

IMAGES

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    Zappos understood that call center interactions were a critical part of customer service. However, when headquartered in San Francisco, it was difficult to find the right type of committed, service-oriented people with whom to staff its call centers. ... It'd be an awesome and really powerful case study if Zappos has largely been immune to ...

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