Zappos.Com Case Essay

1. Sources of competitive advantage lay in the field of their first offer. * First of all they provided a huge selection of styles, colors and sizes of shoes as it was one of the biggest problems of traditional retailers. * At the first stage of their entering of the market, Zappos was the first-mover, which eventually supported its success as the market for on-line order of shoes was estimated to be about $2 billion. * High level of customer satisfaction was also one of the important factors to indicate proper operations of the Zappos.Company achieved such a success due to its corporate culture and a value of extreme concentration on its customers. In the retail business on of the indicators of retailer success is the level of customer return and Zappos succeed to attain this indicator on a very high level. Corporate culture was about delivering WOW effect through service and hiring people who were passionate about service was the most important concerns of the top-managers.This WOW effect was delivering through many ways: from the speed of site loading, all-round telephone support, allowance for 365 days of return, extensive information about the products and fast site loading. That’s why customers were willing to make purchases more often. In my opinion, service is a very important part of providing sustainable sales growth for the company as it creates an image of reliable company which operates in the internet and helps people to choose between traditional shopping and e-shopping. This image while managed properly was a sustainable competitive advantage for Zappos.As it was mostly mentioned features of a corporate culture which provide this competitive advantage than we can say that corporate culture is a background for it. 2. According to the position of the company to retain loyalty of the customers and provide WOW effect through service, it became more important to use UPS as a reliable logistics provider and organize 1-day air delivery with no e xtra price. Therefore, I can assume that reducing marketing costs for gaining new customers were the right decision as long-term partnership with previous customers was able to generate profit and new customers in the long run perspective.From another side, Zappos was able to keep transportation costs on the constant level partly from the scale of the collaboration with UPS (as it was mentioned, Zappos has become one of the top three UPS shippers). And as it was estimated, UPS ground shipping was able to reach only 11% of Zappos’ customer within 1 day. Knowing the fact that consumers got used to high qualitative and fast delivery, this could significantly harm the perception of the brand by loyal customers. This is the reason why company didn’t refuse to provide one-day air shipping. . First of all, we should understand that in situation of crisis people are decreasing their spending on high-end products if they previously had opportunities for that. That’s why it can be suggested, that company should concentrate more on mass market products and decrease costs while being very careful about scalable expansion. As it was mentioned in the case, Zappos searched for opportunities to improve its supply chain without harmful effect on customer satisfaction.From this point of view, company can concentrate more on retaining loyal customers and acquiring new customers partly by providing promotional discount actions, but at the same time keep prices on the same level, otherwise it can create a sense of discounter among Zappos clients. 4. The most important concern while expanding such business as Zappos is retaining this WOW effect. There are many factors which could affect this service oriented culture negatively, so that company should understand that rapid expansion in the situation of crisis can be very risky.From the other hand, there is no need to add more product to its product range as its already sell shoes, clothing, handbag, accessories, baby products, beauty, entertainment, eyewear, home, jewelry, sporting goods, and watches. In my opinion, company can diversify its businesses by developing other e-platforms with mentioning that they are powered by Zappos. That means that company could partly avoid risks connected with brand perception and increases sales level by selling more products. 5. The environment of a more cost-conscious consumer can harm the business if it won’t be careful about its costs.The main idea here is to provide at least the same level of quality in service with constant rates. Zappos can lower transportation costs through developing closer relationships with transport companies (for ex. try to reduce shipment costs from UPS or use ground shipment when it won’t extend delivery time). Company can also provide selective discounts (for ex. providing promotion discounts for loyal customers or creating encouraging promotional events). They could also take into consideration competitorsà ¢â‚¬â„¢ activities and offers in order to make sure that they provide the best prices or better opportunities for their clients.Zappos must take advantage of its other core competencies to ensure that the customer will choose to buy from Zappos as long as they are not paying more for the product. Probably, other variant to boost sales would be testing the system when customer have an opportunity to enjoy free shipping for a bit higher price, while company could gain profitability from a scope of the shipments. 6. First thing which comes to a mind is preserving Zappos’ corporate culture and brand on the same level as these things made Zappos that successful.In my opinion, it would be better to leave Zappos as an independent entity with its charismatic top-manager and founder Tony Hsieh while his forces led company to the leading position. Another thing to concern is a cost structure. One of the ways that Amazon tries to deliver a great customer experience is by offering low pr ices, whereas Zappos wasn’t ever been concentrated on price competition. This policy also shouldn’t be excluded from the Zappos future strategy as Zappos brand is more about service, but not a lowest price.Probably, another important step would be Zappos’ access to Amazon’ resources. They could be improvements and access to supply chain expertise, warehouses, suppliers and other advantages. Finally, Amazon could use Zappos for looking upmarket towards higher-priced goods. The high touch model obviously comes with higher costs. It’s much more attractive when selling a $400 pair of boots than a $29 pair of flip-flops. Zappos has already been rapidly expanding their product offerings so greater sales of fashion items like handbags and wallets are already steps in this direction.