Zappos after the Case

After reading the Zappos.com case, I was curious about the answers to some of the study questions as well as how things turned out for the company. I've ordered shoes from them before, so I knew that they were still in business. However, I never really knew much about them or the how well they were doing.

The case authors were correct in saying that 2008 would be a challenging year for Zappos.com. Even though the company was able to reach their projected sales figure of $1 billion, they had to lay off eight percent of their employees. For most companies this would merely be a casualty of doing business in lean time, but for Zappos.com it was a hard pill to swallow since the company is so geared towards creating a good experience for their employees and thereby their customers. This can be seen in the two previous links as well as other posts on the CEO/COO blog (which is a great concept on its own for keeping employees and customers "in the loop" and is a great illustration of the company's transparency policy).

It seems that in order to better serve their customers while facing the economic realities of decreasing growth, Zapos.com moved towards greater automation in their warehouse facilities, as the case mentions. The authors talked about the use of conveyors and carousels, however I found this video that better details how the company began to use Kiva warehouse robots in 2008. The robots (and the Kiva system, in general) seem to allow the company to fill more orders, in a shorter amount of time with less people. In other words, this was another way they were able to give their customers better service by creating efficiencies in and dealing creatively with their supply chain.

What is perhaps most interesting, is that despite the economic downturn and market conditions of 2008, Amazon.com acquired Zappos.com for a reported $1.2 billion in 2010. As part of the acquisition or merger, depending on your point of view, Zappos.com was able to ensure that all of their employees would remain on board, the leadership would remain in place, and they would have the freedom to operate as a separate entity under the Amazon.com umbrella. While these seem like lofty expectations for a merger, it seems that after one year Amazon.com has honored the agreement.

It is worth noting that Zappos.com, as the case alluded to, did end up creating an outpost in Canada. However, they had to close the Canadian operation this past March. It seems that some of the sales agreements and other factors precluded the company from being able to offer Canadian customers the same level of service Zappos.com wants to exemplify.

So it seems rather than expanding to other countries, Zappos.com has focused on its ability to create an exceptional customer experience and exceeding the customer's expectations to grow the business moving forward. In fact, you could even argue that by merging with Amazon.com, Zappos.com has been able to focus even more on the customer experience while utilizing Amazon.com's ability to reach new customers. Do you feel this is the right approach or should they have chosen to focus on other initiatives like the "Powered by Zappos.com"? And does keeping with this approach adhere too closely to the corporate culture to the detriment of expanding the business in other ways (e.g. closing the Canada operation)?