The document outlines the history and growth of Zappos from its founding in 1999 to its acquisition by Amazon in 2009, highlighting significant milestones and gross sales progression. It emphasizes Zappos' focus on customer service, company culture, and clothing diversification as key factors contributing to its success. The document also discusses the implications of the Amazon acquisition and Zappos' intention to maintain its unique culture and operational independence.

1. KELOMPOK 7 – MM EKSEKUTIF B 27C
DIAN ATIKA – RAFIKA - RERY INDRA KUSUMA
Zappos

2. CASE SUMMARY
MAIN ISSUE
PROBLEM STATEMENT
ANALYSIS
RECOMMENDATION

3. CASE SUMMARY

6. YEAR Milestones
1999 - Found by Nick Swinmurn
- A variation of the Spanish word Zapotas which means
“shoes.”
2000 - Zappos records $1.6 million in gross sales (exhibit 6)
- Zappos had 150 brands and 400.000 pairs of shoes
2001 - Nick Swinmurn and Tony Hsieh as Co-Ceo of Zappos
- Sustained effort produces $8.6 million in gross sales
2002 - The brand elevate gross sales to $32 million
2003 - Gross sales Zappos rise to $70 million
2004 - Gross sales Zappos more than double to $184 million
2005 - Sequoia increases its investment in Zappos to a total of
$35million
- Alfred Lin, cofounder of venture frogs, join Zappos as CFO
- Gross Zappos sales increase to $370 million
- Zappos moved its headquarters to Las Vegas

7. YEAR Milestones
2006 - Nick Swinmurn leaves Zappos
- Gross sales at Zappos climb to $597 million
2007 - 6pm.com is acquired by Zappos
- Zappos expand its product categories to include eyewear,
handbags,clothing, watches and kid’s merchandise
- Gross sales at Zappos hit $840 million
2008 - Gross sales at Zappos hit $1 billion
- Zappos net Revenue of $635million and net income of
$10.8 million
- Buy Kiva Mobile Fulfillment System (Kiva MFS)
2009 - Sold to Amazon.com for $1.2Bil

8. Zappos Gross Sales by Year
2000 2001 2002 2003 2004 2005 2006 2007 2008
Gross Sales 1.6 8.6 32 70 184 370 597 841 1014
$0
$200
$400
$600
$800
$1,000
GrossSales$M's

9. Owning the 3 C’s:
Clothing, Customer Service, Culture
Customer Service
Clothing
Culture

10. - Differentiator that gave the company competitive advantage
- 2005 Zappos core values
- 2008 created culture book
- Started a pipeline :
- 225 hours of core training
- 160 hours initial/new hire training
- Additional courses: effective communication, coaching,
overcoming conflict & managing stress
- Additonal 39 hours: Inspiring Great Teams, Leadership
Zappos Style & Cultivating Culture
COMPANY CULTURE

11. 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
Zappos Core Value
COMPANY CULTURE

12. Customer Service
– Believe rapid growth was due to customers loyalty
– CLT team receives an average of 5,100 call per 24 hours
– Goal is to “wow” customers & establish personal connection
– Call times is not measured
– Call center turnover in 2009 was only 7% whereas industry
average was 150%
– Do not implement a pay-per-performance or reward system
– Fulfillment Center outside Louisville, kentucky, consist 3 storage
area :
– Static Racks – freestanding shelving units
– Carousels – ferris wheel type shelving units
– Kiva – Automated storage & retrieval system using inventory
pods

13. Customer Service

14. Customer Service
What customers first see
– 24/7 customer service representative
– Free shipping
– Free return shipping
– 365-day return policy

15. Customer Service:
What customers experience
– Fast, accurate fulfillment
– Most customers are “surprise”-upgraded to overnight
shipping
• Create WOW
– Friendly, helpful “above and beyond” customer service
– Refer customers to competitors’ web sites

16. Clothing
– 2006 – pursued additional lines of bussines
– U.S clothing market was four times larger than footwear
market
– Within 1 year Zappos had 300 different apparel brands
– 2007 clothing reached 5% of Zappos sales
– 2008 Zappos sold $31 million in apparel

17. MAIN ISSUE

18. Main Issue
Zappos Strategic: Clothing, Customer
Service, and Company Culture
Acquisition Zappos by Amazon on 2009
Continuing to Grow Zappos after 2009

19. PROBLEM STATEMENT

20. Zappos Growth
Hsieh and Lin knew that much of Zappos’
growth, and hence its value, had been due to
the company’s strong culture and obsessive
emphasis on customer service.

21. Company Culture
• What’s the meaning with Zappos philosophy
in their culture?
“you can’t have happy customers without
having happy employees, and you can’t have
happy employees without having a conmpany
where people are inspired by the culture”

23. Customer Service
• How could Zappos customer become loyalty
customer?
“75% of Zappos orders were from repeat
customers”.

25. How overcome their financial
management?
Zappos Financial Management

26. Zappos Acquisition
Why Amazon was choose to acquisition
Zappos?
What are the effects of Amazon acquistion?

27. ANALYSIS

28. Real Power of Service :
2003 = 70K USD
2008 = 1000K
USD
RAPID
GROW!!
100X SALES
INCREASE
WITHIN 6
YEARS

29. Visionary Concept of Service
Visionary Internal Marketing Concept :
 Unique corporate culture
 Unique requiretment method
 Different KPI measurement to ensure service
 Holocrary
Visionary Interactive Marketing Concept
 excellence customer service
 interface of excellence order
Excellence of External Marketing Concept
 book, webpage, holocracy

30. Service Beyond Expectation
5 hours customer service support on call
Delivery in two way
Easiness to Return the good

31. Acquisition by Amazon
What Next??

32. After Acquisition
The acquisition closed on November 1, at a valuation of $1.2 billion (based on Amazon's stock price on the day
of closing). Our investors at Sequoia made $248 million. Our board was replaced by a management
committee that includes me, Jeff, two Amazon executives, and two Zappos executives. As CEO, I report to
the committee every quarter, and Zappos is responsible for hitting revenue and profitability numbers. But
unlike our former board of directors, our new management committee seems to
understand the importance of our culture -- the "social experiments" -- to
our long-term success. In fact, one Amazon distribution center recently began experimenting
with its own version of Zappos's policy of paying new employees $2,000 to quit if they're unhappy with
their jobs.
Otherwise, Zappos continues to operate independently. Our relationship is governed by a
document that formally recognizes the uniqueness of Zappos's culture and Amazon's duty to protect it.
We think of Amazon as a giant consulting company that we can hire if we want --
for instance, if we need help redesigning our warehouse systems.
In the first quarter of 2010, net sales at Zappos were up almost 50 percent, and
we've added several hundred new employees. The growth has made Amazon very happy, but it's also
creating new challenges. I've noticed that at company happy hours, you don't see as many employees from
different departments hanging out with one another.

33. Why don’t all companies
try to build strong
cultures? I believe we
accomplish more through
inspiration
Inspire employees with vision
that’s bigger than
themselves, that goes
beyond money, profits, and
the size of market share. It is
about raising the bar for
everyone
We’ve been young and
scrappy, managing
business very tighly. With
more people as well as
capital we can grow much
faster
We are not selling
shoe. We are
SERVICE Company

34. RECOMMENDATION