Zappos.Com Marketing Case Study

MBA 6050P

Yellow Team

Hand-In Group Assignment

Zappos.com: Focus on Customer Service

Problems

* Lack of competitive pricing but claimed to offer customers the lowest prices for the products it sold.

* A price-protection policy was offered where a customer could be refunded 110% if the difference between our price and any lower price offered by a competitor. However, this policy was dropped in 2008 due to it being inconsistent with the aim of making the company customer service-focused, as opposed to price-focused.

* Some analysts felt the decision to drop competitive pricing would lead to a drop in sales.

* Consumers would possibly be reluctant to pay a premium only for customer service, particularly when buying branded products.

* Customers who wanted good service could always go to a shoe store, and while buying online, they would be more likely to use any extra money to purchase a better brand.

* A separate website called 6pm.com was created to sell highly discounted products but some analysts felt selling through two different websites would dilute the brand image.

* Elimination of “drop-shipping” and free shipping.

* Free shipping was offered and allowed customers to return the product if they were not satisfied for any reason. Customers’ accounts were even credited while the goods were still in transit.

* In 2007, free shipping costs were around $100 million.

* Until 2003, drop-shipping was used so every shoe displayed on the website did not have to be stocked in the warehouse. 80%-90% of items displayed were actually kept in stock.

* Drop-shipping accounted for 25% of the revenue but the process caused delivery delays for customers.

* The transfer of data from retailer-to-manufacturer-to-fulfillment center was lengthening the order fulfillment process which meant 10%-20% of customers were finding out a couple of days later that their item was out of stock, which lead to negative word of...