Question 1: What are Zappos’ supply chain related core competencies and sources of competitive advantage? How sustainable are they? What role does corporate culture play in these questions?
Zappos consider themselves “a service company that happens to sell shoes”. The main core competency of the company is its customer service. Hsieh considered customer service to be one of the most important aspects of the business. If a business has excellent customer service, then customers are more likely to return to purchase from the business again. Hsieh saw that excelling in customer service and trusting the word of mouth of their customers would build up their customer base and their sales. A 24hour call centre and a toll-free number, which was displayed on all of their websites, were the basis of this customer service. Every call operator was trained to deal with any situation; there was no need for the customer to be transferred to a different operator or to hold while a supervisor/manager was called. Zappos provide free delivery to their customers within 5 working days. However they aimed for next day delivery. This was all part of the customer service which Hsieh was so passionate about. If a customer received their purchase the next day, they were impressed and more likely to purchase again. One of the biggest issues for customers when buying online is the issue of fit. Since you physically cannot try on the product before buying it, it leads to customers being reluctant to buy online. Zappos addressed this problem by providing free returns 365 days of the year. Zappos’ excellent customer service is a distinct competitive advantage. Another one is their acquisition of the online discount shoe retailer 6pm. Through 6pm, Zappos could sell shoes at clearance prices without harming their own image as a high end retailer. They monopolised the shoe market as they could now target many different customer bases. Another advantage is bringing their inventory in-house. This way, any shoe that is on the Zappos website, is in stock. It provides a better experience for the customer and it makes the Zappos supply chain more efficient and effective. With the world in recession, sustainability is the key word in business. The services offered by Zappos cost the business a lot of money, but in the eyes of Zappos, it is worth the cost. Is the world class customer service sustainable in these times? It has to be. Zappos has built itself around the fact that they are an excellent service provider. Take that away and Zappos would lose a lot of its loyal customer base. Corporate culture has a lot to play in the core competencies of the company. The employees enjoy going to work, they enjoy being there. They are loyal to the company and that makes them better workers. They go above and beyond for customers because they want to, not because they have to. The people in leadership roles encourage and nurture creativity and fun in the workplace. The culture of the company is just as important to them as the growth of the company. As they see it, one will feed off the other. Question 2: How important is next day air shipment to the customer experience? Is it worth the cost? How might you change it in the cost-conscious environment facing the company in the late 2008?
The next day air shipment is an extremely important factor for the customer experience with Zappos. Next day shipment is one of the main “WOW!” factors that Zappos has based its company around, along with its exceptional customer services and the free returns within 365 days policy. Changing this service because of an economic downturn means that Zappos would potentially lose customers. The money Zappos could save by not investing in next day delivery would not balance out the money they would lose from loyal or new customers buying from the competition in the long run. Maintaining high quality service is a long term investment that Zappos believe will comprise long...
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