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Zappos.com Developing a Supply Chain to Deliver WOW_ Michael

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					Zappos.com: Developing a Supply Chain to Deliver WOW!   Zappos was founded in 1999, during the Internet boom, to sell shoes online.
Michael Marks, Hau Lee, David W. Hoyt                   The company's founding premise was to provide the ultimate in selection to its
                                                        customers--all brands, styles, sizes, and colors. Zappos organized all aspects
Type: Stanford case                                     of its business (including recruiting, culture, call center, inventory, website,
Pub. Date: 02/13/2009                                   and supply chain) to provide the best possible service--it wanted to "wow"
Product #: GS65                                         everyone who interacted with the company, from customers to employees to
Length: 27p                                             corporate partners. Zappos grew rapidly, and by 2008 was profitable with net
Teaching Note: GS65TN                                   sales (after returns) of about $650 million. The company faced a number of
                                                        issues as it looked forward. While it had penetrated only about 3 percent of
                                                        the U.S. market for shoes, Zappos had expanded its product lines to items
                                                        such as camping gear and video games. It needed to determine those
                                                        elements of its strategy had contributed to its success in shoes, and whether it
                                                        would be able to duplicate that success in other product lines. It also needed
                                                        to determine how it could scale its business--much of the effort it had made to
                                                        "wow" its customers was labor intensive and expensive--could this be scaled
                                                        to a company with revenues of tens of billions? Finally, the economic
                                                        landscape changed dramatically in late 2008, with the financial market
                                                        collapse and recession. The service-intensive Zappos.com business was
                                                        based on sales at little to no discount, unlike many websites that relied on
                                                        selling at the lowest possible price. Would the company need to make
                                                        changes to respond to the changed economic environment, and if so, what
                                                        were those changes? The case provides an opportunity to evaluate the core
                                                        competences of an Internet retailer that has experienced rapid, initial success.
                                                        The case enables students to consider supply chain issues, which are critical
                                                        to the company's success, in the broader context of the business: the bases of
                                                        Zappos' success, its core competencies, culture, and competitive
                                                        environment.
                                                        Learning Objective: The case highlights an Internet retailer that
                                                        has grown rapidly, but faces significant issues, including scope of
                                                        product offerings, supply chain costs, customer service costs, and
                                                        scalability. The teaching objective of the case is to examine these
                                                        issues, and the considerations that the company must make in
                                                        choosing a way forward.

				
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