Zappos is an on-line retailer that started of focusing on selling shoes, but now they expanded their market niche to selling clothes, accessories, eyewear, watches, sporting goods etc. Nowadays, online retail is such a competitive market so it is very vital for an online retail to stand out to its potential customers. As an online store, it had to create a competitive advantage(16) in order to make it more unique. By focusing on customer loyalty, Zappos has managed to succeed in its customer service (42) value proposition. Zappos commitment to customer service satisfaction is clearly demonstrated by their value propositions. These are free shipping ways, a 365 day return policy and 24/7 customer service. Zappos took a different approach with their online retail store. Instead on spending thousands of dollars on advertising, they decided to spend money on improving their customer relationship management (271). Without customers, no revenue would be generated from an online retail such as Zappos. When it comes to on-line retail, the customers first impression of a website is very important. Whether the website was user-friendly, not too many ads on the website and whether the process is fast are some of the things customers would use to critic a website. Using CRM predicting technologies (273) would be ways an online company is able to track customer behavior. Online customers would opt to shop for clothes at Zappos.com because of the wide variety of brands available for them to choose from. Zappos is like a one stop shop. Zappos customers are able to choose from brands such as Betsey Johnson, Tommy Bahama, Juicy Couture and Calvin Klein. With all these brands in one website, this enables the strategy of cross-selling (276) and up-selling (276) a success. For instance, when a customer is about to purchase a dress on Zappos.com, the site shows the customer what other customers who bought the dress also bought. The product would not necessarily be from the same brand as the dress. Useful data (8) is also available about products and services offered and on the Zappos website. People would also settle for online shopping simply because of the convenience of it. Customers are able to e-shop (78) meaning they can shop at any time of the day, there are able to narrow down searches, shop by a particular brand amongst many others. Shoppers are not obligated to make decisions right away, they are able to save things on their carts and remove them later if at all they decide they do not want them. Convinience and having no time constraints are one of the major advantages that online retailers have versus shopping be done in a brick and mortar. What Zappos does with these other brands, is a good example of partner relationship management. (286) Benefits of partner relationship include expanded market coverage, offering of specialized products and a broad range of offerings. Suppliers such as Nike should help improve Zappos supply chain because it helps enhance their brand value. Being with a much popular online retailer, suppliers also create brand awareness for their own brands. Zappos holds a strong relationship with its suppliers. So such brands would use that supplier relationship management (286) to their full advantage. Zappos suppliers also have full access to an extranet (72) that shows inventory and sales data. The online retailer also uses business intelligence (38) to find out what customers want.
Amazon.com recently purchased Zappos. Zappos will continue to operate under its own brand and management, but Amazon's C-level managers want more than additional market share and revenue from this acquisition. Amazon, like many companies, has made continuous improvement (CI) an important part of operations and strategy. Describe three (3) specific capabilities or sources of competitive advantage that Zappos has developed, and discuss why Amazon needs each of these three items. Hint: you don't need to do a lot of research...
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