Tuesday, February 21, 2012

Going the Extra Mile for the Customers.. and Vendors?

How far does does one have to go in order to please the customers?  Is there a limit to what one should or should not do in order to keep your customers happy?

The Customers
Zappo's online success stems from its commitment to bring the "WOW" experience to their customers online.  Deliver what your customer wants.  This became their foremost goal.  We have seen this reap astounding benefits to the company, sales-wise.  It's ability to recruit and keep loyal online customers resulted in its impressive growth thru the years.  Interestingly, Zappo rehauled its originally outsourced distribution arm.  As the company grew, so did the bulk of the orders.  Zappos got disappointed with its 3rd party distributor, eLogistics in handling the job.  It made this huge decision  to transfer warehouse operations inhouse.  Usually a company does a job inhouse THEN outsources it after growth.  Zappo did this in reverse.  It outsourced then transferred operations inhouse AFTER it expanded.  Zappos opened its own warehouse.  Their CEO's comment: “As an e-commerce company, we should have considered warehousing to be our core competency from the beginning. Outsourcing that to a third party and trusting that they would care about our customers as much as we would was one of our biggest mistakes.” 

Now, it's supply chain robots on the run for Zappos at those inhouse warehouses (article below). What took 48 minutes to 3 1/2 hours before takes 12 minutes now for the Kiva-enabled robots to accomplish! "They operate in a state of perpetual motion, delivering a never-ending queue of orders for the picker." 

Anything for the customers, right?

The Vendors
As I was browsing further thru  more articles about Zappo, I realized that it is equipped with a two-edged sword in the online retail war : not only that it succeeds in keeping great relationships with its customers, it has a very close relationship with its vendors.   Zappo not only aims to please their online retail customers, its prides itself in going the extra mile for their vendors as well. 

Zappos ensures great experience for their vendors everytime.  When one of their vendors visit their headquarters,  a luxury car picks them up from the airport.  This is followed by a tour of the offices, and their CEO, Tony Hseih always makes sure to pick up the tab after dinner.  As quoted fromt the man behind Zappos' success: “The benefits we’ve reaped from concentrating on building relationships with our vendors are endless…When inventory’s scarce, they help procure inventory on hot-selling items…They work closely with our marketing team to plan the right campaigns, making sure we’re in the right places.”we created true transparency in our business, not only would they help us, they’d benefit as well…They’re able to see inventory levels, sales and profitability. They can write suggested orders for our buyers to approve…In effect, they’re given the keys to the shop  This is quite the subtle strategy for improved supply chain, giving them access to your "home" has made them feel like family, someone you can trust when problems arise..(or in this case, when hot-selling items are scarce and you need to have them).

We don't usually hear of that kind of  trust level in retail supply chain, so i wonder it is not as common as I think it should be? 

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