Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister “Marketing raises brand awareness, but customer experience builds brands”

Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Founded in 1999 by Nick Swinmum in San Francisco, CA Swinmum couldn’t find a pair of Airwalks he wanted at the local mall Received $2.0M in venture capital from Venture Frogs Tony Hsieh – became CEO Alfred Lin – became COO/CFO

Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Business model: E-commerce distribution channel for the footwear industry Offer a wide selection of shoes Have exceptional customer service and experience Drop ship – no inventory risk

Expanded from footwear in early 2000’s into: Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Expanded from footwear in early 2000’s into: Handbags, eyewear, jewelry, watches, clothing, travel accessories. Switched from drop ship to holding inventory in 2002 Currently the largest footwear retailer with sales > $1.0B Handle 5,000-6,000 calls and 1,200 e-mails/day 1,500 employees, headquartered in Las Vegas, NV 75% of customers are repeat customers Acquired by Amazon in 2009 for $1.2B.

Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Company Ethos Brand – focus on customer service (your customer is your brand) Culture – One rule: “Be real and use your best judgment” Pipeline – Offer personal and professional growth opportunities If you get the culture right, the other stuff will happen naturally”, Tony Hsieh, CEO Zappos

Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Zappos success due to: Excellent customer service Strong corporate culture Large selection of footwear Fast distribution Wide social media presence

Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Customer service Zappos strives to be the industry leader in customer service 700 + customer service team 365 day return policy Free shipping both ways 24/7/365 customer service Go above and beyond – “WOW’ing” the customer Forbes: The 10 Most Customer-Obsessed Companies In 2018

Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister

Social Media Encourages employees to use Twitter Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Social Media Encourages employees to use Twitter Tony Hsieg has 2.5M followers Encourage customer feedback on social media

Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Distribution Close relationship with shipper (UPS) Fast free shipping considered a marketing expense Located D.C. close to UPS main airfreight hub in Kentucky Encourage returns to drive sales Deliver fast (air), return slow (ground). https://www.youtube.com/watch?v=tFyW5s_7ZWc

Multiple choice questions Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Multiple choice questions What product did Zappos start selling first? Apparel Auto parts Shoes Accessories What is Zappos best known for? Wide selection Competative prices Fast shipping Excellent customer service All of the above https://www.youtube.com/watch?v=tFyW5s_7ZWc

Discussion questions: Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Discussion questions: How can Zappos remain competative when not competing on price (since they aren’t the cheapest)? Can the transparency that Zappos expounds on social media potentially hurt them? If so, how? What could be a potential disrupter? https://www.youtube.com/watch?v=tFyW5s_7ZWc

Zappos: Happiness in a Box Case Study: Stanford School of Business CSUCI BUS 550 The Contemporary Firm Jon Hollister Bibliography: https://www.inc.com/brian-scudamore/airstreams-awesomeness-tony-hsieh-way-to-do-business.html   https://qz.com/849980/zappos-is-struggling-with-holacracy-because-humans-arent-designed-to-operate-like-software/ Zappos: Happiness in a Box. Stanford Graduate School of Business, Sept, 2010 https://www.forbes.com/sites/blakemorgan/2018/02/15/the-10-most-customer-obsessed-companies-in-2018/#65d488e6ba10 https://www.entrepreneur.com/article/225140