Nick Swinmurn has founded Zappos in 1999. The idea to do that came when he could not get a pair of brown Airwalks at the local shopping mall (Jacobs, 2009). During that same year, Nick approached Alfred Lin and Tony Hsieh with the thought of selling the shoes online. Tony was at first cynical, and almost deleted Nick’s voice mail. After Nick stated that footwear in the United Stated is a 40 billion dollars marketplace, and 5 percent of it is now being sold through mail order catalogs; Lin and Hsieh decided to put in $2 million through their investment business enterprise Frogs (Hsieh, 2006). They officially launched the company in June 1999, under shoesitte.com as the original domain name.
Zappos shoe Company, an auxiliary of Amazon, became the leader in internet footwear and apparel sales by striving to offer consumers the best likely selection and services. The company carries millions of products from more than 1000 apparel and footwear brands. It is currently located in Las Vegas, Shepherdsville, KY, and having a brand-spanking new expansion software shop, the company is back in its hometown, San Francisco, CA.
The company has been developing over the years, majorly by providing a number of customer-friendly services, which other internet shoe retailers failed to provide, such as generous return policy and free shipping. Zappos provided some of these services at the substantial price to the company.
The Products and Services the Company Provides
Zappos’ main selling foundation is shoes, which is about 80 percent of the overall sales (Cheng, 2010) Currently there are over 50,000 varieties of footwear sold in the Zappos stores from brands like Ugg boots, Steve Madden heels and Nike. They also supply the niche shoe markets, including hard-to-find sizes, American-made shoes, narrow and broad widths and vegetarian shoes as well. In 2004, the company launched a subsequent line of high-end footwear known as Zappos Couture.
In 2007, Zappos extended their stock to include clothing, such as handbags, watches, eyewear and kids’ products, which presently account for about 20% of the yearly revenues. Zappos anticipates that apparel and clothing will bring in around $1 billion worth of returns by 2015, as the clothing market is four times bigger than the footwear one (Twitchell, 2009).
Major Competitors in the Industry
There are three major competitors of Zappos Company. The first one is Endless.com, which is managed by Amazon.com, and is committed to handbags and shoes. Endless.com was formed in 2007. It provides services such as wide selection, free overnight shipping, free return shipping, fulltime customer service, 365 days-return opportunity and 100% price guarantee. Another competitor is shoebuy.com, which claims to be among the top online retailers. Scott Savitz, the CEO, founded this company in 1999. It also sells bags and accessories. This company offers a number of competitive services that include wide selection, free return shipping and no sales tax. The third competitor is the Piperlime.com, which is provided by the Gap Inc., and it is dedicated to shoes only. It was formed in 2006. The services offered by Piperlime.com include free shipping, free return shipping, wide selection and 100% price guarantee.
Description of the Company’s Structure
The approach taken by Zappos is not one of the common ones, where the workplace has the strict hierarchy, line managers and directors – but rather it is an informal structure, similar to a family, instead of a company. By relaxing their organizational structure, the business has empowered workers, making them to be the part of the family and as a result, has augmented the efficiency. Staff wants to go to work and achieve certain results. Even the easiest paces can make an organization more employee-friendly, and every pace is a footstep away from the customary Victorian factory structure, which employees can perceive.
The manners, in which the organizations relate, are as significant as the benefits that they tender to staff. Hierarchy exists in several companies and the manner that employees are treated looks like a feudal system with a Chief Executive at the top, directors below, managers, then team managers who are followed by the subordinates. Unluckily, to an organization of this structure the communication channels are the bottom-up ones. It means that the information to be passes have to be permitted by a more superior person before continuing its way or being banned in some cases.
Organizations that are more flexible are removing this communiqué difficulty and glancing at a social network structure as a replacement of a traditional chain of command. A social network structure established by Zappos consists of those individuals needed to deliver the objectives, and numerous networks might exist depending on the ambitions. Zappos networks exist for a project and may comprise employees from many diverse departments from the business; it may still go broader than the organizations (Paul, 2009).
Zappos’ social network acknowledges the expertise of the workers and does not differentiate intensity but, when running for the objective, gives every associate of the network an equivalent rank. This develops the pace of communication, which results in quicker decision-making processes. Additionally, it also eliminates individuals, who are not ready to be the part of the chain.
SWOT is a short form for internal strengths and weaknesses of a company and corresponding opportunities and threats. It is a broad analysis, where managers build a quick overview of the strategic situation of a company.
- As a business glancing for constant expansion, Zappos have reserve finances of credit joined with income copied from Property Portfolio Development Funds;
- Availability of market is a major boost and strength of Zappos. Zappos has enjoyed both local and international markets for its products. In an atmosphere, where international retail sales are demonstrating drop in performance level, Zappos has faced sales increase of 13% for the markets in the US, and 26% increase in the international markets;
- Online growth has also contributed to the success of the Zappos Company.
- Zappos position of the leader of the price ranges in the US market can lead to abridged profit limits in order to keep hold of the key price points on a must have commercial stuff;
- The footwear outlet channels are not established to run as professional retailers in certain areas of manufactured goods that may be capitalised on by other minor customized retailers.
- Zappos’ name is one of its biggest opportunities. The company has become tantamount in the customer service. By building an outstanding business and constantly establishing associations with its faithful customers, the sky is the limit;
- Zappos has attracted million clients and enthused into profitable position signifying further development and growth within this technological field;
- The growth of Zappos Direct through catalogue and online shopping will develop the exercise of technology, offering the launch pad for well-built footwear and clothing goods with modest to elevated margin profits and less focus on margin per foot returns on sales.
- US markets have been influenced by the economic anxieties through the credit crunch. Lower obtainable income will have its influence, and the tactical focus may call for amendments to lower priced fundamental products with less centre of attention on higher priced products suggesting a change in price architecture;
- For Zappos there is a constant threat of conquest from other competitors or other market participants, who have both motive and means to pursue such accomplishment;
- Changes to customer buying patterns require extra scrutiny. As technology grows, customer buying behaviors change and result in product regions requiring evaluation.
- Rising cost of raw material affects profit margins overall