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Dana Goba BUS 550 - The Contemporary Firm May 21, 2012

Dana Goba BUS 550 - 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

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Dana Goba BUS 550 - The Contemporary Firm May 21, 2012

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  1. Dana Goba BUS 550 - The Contemporary Firm May 21, 2012

  2. 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

  3. 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

  4. Let’s Go Shopping! • www.zappos.com • Photos • Videos • Tags • Reviews • Recommendations

  5. 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.”

  6. 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

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

  8. 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

  9. Warehouse Conveyor • 9,200 feet of conveyor!

  10. 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

  11. Annual Revenue

  12. 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

  13. 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

  14. Core Values • Deliver WOW Through Service • Embrace and Drive Change • Create Fun and a Little Weirdness • Be Adventurous, Creative and Open-minded • Pursue Growth and Learning • Build Open and Honest Relationships with Communication • Build a Positive Team and Family Spirit • Do More with Less • Be Passionate and Determined • Be Humble

  15. 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 Hire slowly, Fire quickly

  16. 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

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

  18. Customer Demographics Courtesy of Quantcast

  19. Repeat Customers • 75% of orders • Higher average orders • $156.27 versus $123.86 • Rely on word of mouthinstead of traditional advertising

  20. 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

  21. 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

  22. 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

  23. 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

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

  25. Hacked • On January 16, 2012 • Personal information of 24 million people had been hacked • Names, email, 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

  26. Questions?

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