Case Analysis of Zappos.Com - Emerging Technology Marketing

EMERGING TECHNOLOGY MARKETING

Case analysis of Zappos.com

Presented by the team of Divya Sachdeva, Johann Matthai, Ilana Taxman Mendoza, Udayan Goswami

Jm2526@cornell.edu

Idt4@cornell.edu

Ds2254@cornell.edu

Ug356@cornell.edu

1. What are Zappos’ core competencies which provide them competitive advantage? How sustainable^[a] are they?  What role does corporate culture play in these questions^[b]?

As elucidated in the articles prescribed as essential reading for the case, a core competency is not an internal assessment of which activities a company performs best, rather it should be indicative                                                                             of an external assessment of what company does better than competitors in its industry. Keeping this is mind, we believe that Zappos’ core competency is the fact that they are utterly service oriented, and this is the attribute they’re known for most. The fact they’re an online shoe-seller is but subtly integrated into their value proposition of being a ‘services company’.

In our opinion, this ‘service oriented’ disposition affected all aspects of the company’s functioning, including the development of a highly efficient supply chain process, a flexible return policy, and an enhanced call centre experience – thus their warehouse is operated 24-7, in-spite of increased costs, to ensure that there are no shipping and delivery delays. Similarly, the company boasts of a 365 day return policy with free shipping both ways. Their call centre services, apart from providing the most reliable and efficient service within the industry also host representatives that have gone through an ‘immersive’ training process.  We were especially taken aback by the peculiar decision to ‘direct customers to competitor websites in case we happen to be out of stock’. All in all, every single decision the company made, and every process put in place to support that decision alluded to one focus – customer delight. This delight effectively translated into an almost organic process of relationship marketing (with word of mouth being a primary source of new customers) based on a business model that thrived on loyalty (we know that 75% of all customers make repeat purchases)

As was eloquently described in the reading ‘Competing on Resources’ however, this core competency could be developed only if Zappos possessed a unique resource/set of resources that would likely need to be inimitable, non-substitutable, and intrinsically linked to the company (among other attributes). We believe that the core competency of ‘service orientation’ and/or ‘customer delight’ that Zappo has been able to develop is intrinsically linked to the ‘work ethic’ and culture’ the company embodies. This is the unique resource the company possesses, that was embedded into its very DNA during its inception in 1999. Based on a set of core values that included, among others aspects such as ‘Create fun and a little weirdness’, ‘Build open and honest relationships with communication’, and ‘Build a positive team and family spirit’, the company was able to develop a culture that prided itself on its relationships, its commitment to service and its focus on customer. The employees were made to share the vision of the firm, and enjoyed a working culture that was flexible and fun but also allowed for thought leadership. This unique resource provided for the firm a significant core competency that was sustainable by virtue of being ingrained in the working of the firm.