Dana Goba BUS The Contemporary Firm May 21, 2012

Nick Swinmurn Graduated from UCSB in 1996 Unable to find brown Airwalks in his size Thought the internet could solve the issue No experience in retail or shoe industry Founded Zappos in 1999 Hired Fred Mossler from Nordstrom Left Zappos in 2006 Formed Dethrone Royalty in 2009

Tony Hsieh & Alfred Lin Harvard classmates Sold LinkExchange to Microsoft for $265 million Founded venture capital fund, Venture Frogs Invested in Zappos Hsieh became Zappos advisor, then co-CEO Lin joined as COO/CFO

Let’s Go Shopping! Photos Videos Tags Reviews Recommendations

Company Information Sell shoes, clothing, beauty products, accessories, and housewares Free shipping both ways 365 days to return 24/7 customer service “Customer services is what we do.”

Company Information con’t Headquarters in Las Vegas Warehouse in Shepherdsville, Kentucky 1,500 employees 1,200 brands 200,000 styles 900,000 unique UPCs 4 million items in warehouse Fortune’s 100 Best Companies to Work For from 2009 to today

Warehouse & Shipping In the beginning, manufacturers would deliver to customers Then tried outsourcing warehouse Realized had to open own warehouse

Warehouse Upgrade Moved to larger facility Located near UPS hub in Louisville, KY 800,000 square feet Custom built automation Able to ship twice as many packages Decreased cycle time No one lost their job

Warehouse Conveyor 9,200 feet of conveyor!

Live Shopping Photo studio and full-service photo lab in fulfillment center Take photos as new products arrive HQ writes description On website in 48 hours

Annual Revenue

Path to the Culture Swinmurn – desire to build internet powerhouse Hsieh – focus on culture and employee happiness Very best customer service Burst of internet bubble Moved headquarters to Las Vegas

Employee Culture Input Culture book Began in 2004 Compiled and published annually Employees building the culture Core values Live them, don’t just stare at them on a wall

Core Values 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 Honest Relationships with Communication 7.Build a Positive Team and Family Spirit 8.Do More with Less 9.Be Passionate and Determined 10.Be Humble

Finding the Right Employees Qualities Weirdness Humor Humility Luck Training 4 weeks of Customer Loyalty Team training 1 week at warehouse $3,000 offered for people to quit after training You’re hired Employees are encouraged to spend time together outside of work Managers are required to spend 10-20% of their time hanging out with team members

Call Center Most call centers have 300% turnover Zappos saw call center as an opportunity Customer Loyalty Team (CLT) No script Conversations help build the brand Personal Emotional Connection (PEC) Not compensated based on the number of calls Track longest customer call Hseih is adverse to typical retailing techniques

Customer Loyalty Team Need to hire the right staff Was difficult to have customer service career in San Francisco Looked into outsourcing

Customer Demographics Courtesy of Quantcast

Repeat Customers 75% of orders Higher average orders $ versus $ Rely on word of mouth instead of traditional advertising

CRM Software Created custom Customer Relationship Management software Not many CRM in 1999 Want control over process and systems CRM needed to be driven by customer service

Social Media Building open and honest relationships The good, bad, and ugly are posted The true brand is what your customers say you are Telephone Twitter Blogging Facebook Video

Social Media: Telephone Considered the best social media 5,000 to 6,000 calls per day If interaction is done right, people remember and tell others

Zappos Insights Other companies seeking insight regarding management practices Began business to business consulting Offer seminars 1 day Gold Package 2 day Boot Camp 5 day Innovation Series

Amazon Acquisition Announced in July 2009 Stock deal worth $1.2 billion Honest and open communication with employees from Hsieh to all employees

Hacked On January 16, 2012 Personal information of 24 million people had been hacked Names, , billing/shipping address, phone, last 4 digits of credit card Full credit card information stored separately Required customers to change passwords Shut down call center due to high volume

Questions?