Zappos: how strategy gets executed via business model

Started in 1999 by Tony Hsieh (pronounced Shay) for selling shoes online Zappos became profitable in 2002 and never turned back on the bottom line. In 2009 it hit 1.2 billion and became the No. 1 in online shoe retailer prompting Amazon to buy it out.

What made amazon to buy out this company? The answer lies on the connection between business strategy & business model. Business strategy deals with a vision & unique concept that must offer unique value proposition to the segmented customers.  Business model is the road map that executes this strategic concept with mileposts of evaluation & modification as and when necessary.

For Zappos, customer-centrism is the key value and objective. Acquiring customer alone does not suffice in an on-line environment. What a business needs is repeat orders from customers on regular basis. This can be summed up as customer retention. Therefore, the central focus is on customer service & selection that over awns pricing. Customer must be provided with delightful selection of items that offer value for money too.

Zappos business model lends expression to this strategy in all the nine building blocks incorporated under it. Due to space limitation, I explain only three of these building blocks:

1.        Key activities: Acquiring wide range of shoes from suppliers and list them under different segmentations such as women, men, girls, boys and kids matched with departments such as shoes, clothing, accessories, jewelleries etc. Selling the products and delivering on schedule to the maximum customer satisfaction

2.        Value proposition: Excellent customer focus with the ideal of “doing the right thing to succeed”. Provide largest selection of items on-line than any others in the market do. Bought items are shipped freight free on the following day from centralized store. 24/7 & 365 days service with guaranteed return policy that includes buyer return freight cost as well

3.        Customer relationship: There are three core values of Zappos that are seen in action in their customer relationship. These 3 core values are:

Deliver “wow” through service

Build open and honest relationships with communication

Be humble!

All three values combined shape customer relationship in providing grand selection of shoes & other items ready for shipping as a clear departure from others in the market who after customer choice is made come out with disappointing tags such as  “out of stock “ or “ sold out”. Moreover, the process of selection is guided by dedicated staffs who provide authentic delightful service experience in facilitating choice & selection of items giving value for money as well as everlasting satisfaction.  

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist