Zappos.com (B)

8/17/2019 Zappos.com (B)

1/8

D o N

o t C o p y

o r P o s t

This document is authorized for use only by JOHNNY MAHECHA at EAN until March 2014. Copying or posting is aninfringement of copyright. [email protected] or 617.783.7860.

02/20

This

super

basis

ddit

cases

Copy

COPIEIN ANY

13-5932

ase was w

vision of W

for class dis

ional mate

.insead.edu

right © 2013

MAY NOT BE

FORM OR MEDI

itten by O

. Chan Kim

cussion rat

rial about

.

INSEAD

ADE WITHOUT

M WHATSOEVE

Young Ko

and Renée

er than to il

INSEAD c

ERMISSION. NR WITHOUT THE

Za

Str

Pe

o, Institute

auborgne

lustrate eith

ase studie

PART OF THIS

PERMISSION OF

ppos

ategy

ple

Fellow of t

, Professors

er effective

(e.g., vi

UBLICATION M

THE COPYRIGH

.com

Powe

e INSEAD

of Strategy

or ineffecti

eos, spre

Y BE COPIED,OWNER.

Blue

(B):

ed b

Blue Ocean

at INSEAD. e handling

adsheets, l

STORED, TRANS

cea

Cult

Strategy In

It is intend

of an admin

inks) can

MITTED, REPRO

Strat

InstitIN

re an

stitute, und

d to be use

istrative sit

be access

DUCED OR DIST

gy

ute260

d

er the

d as a

ation.

ed at

RIBUTED


2/8

D o N

o t C

o p y o r

P o s t


Copyrig

Deliv

“

o

b

s

This isa custoof bootBergdoEvery tis comrequireshoes t

the top-

Zappos Busines

provideis alsorated nmoved

Salariesemployhour. Tdedicatideliver turnove

Foundeyears.retailer Center.defiedelse. T

buildinitself.”3

2009.

1 Cite

http

2 Fra

Cul

3 Ton

Yo

http

t © 2013 INS

ering E

o do you

YouTube

r on You

mething o

ot a conver lookin

s she sawf Goodmame a custoitted to

, they sear ere. Does

notch servi

stands osweek ’s Crs among orated a grewcomer— p to 15th (

of Zappoees at Zappe salaries

on and co and courtr of Zappo

in 1999,tarted in a, with 120During itsonventionny Hsieh,

a brandAnd this

d from CBS,

://www.cbsn

ces X. Frei,

ure,” Harvar

y Hsieh, The

?,” January 9

://www.nyti

AD

ception

emember

” he asks

ube. “I wil

t here.”

rsation bet for shoes.in a Lifeti but a staer calls t

ccommodach their cothis harm t

ce and freq

t for itsstomer Se

nline websat place toon Fortune010), then

s employeos were Keof the Custmitment

eous custo’ CLT was

Zappos gr single off 0 employerapid expal wisdom iCEO of Zround delulture was

CBS News, “

ws.com/vide

obin J. Ely,

Business Sc

New York

, 2010,

es.com/2010

al Cust

hich actre

the woman.

l watch it.

een friend 1 The repreme televisndard custe companyting any impetitors’he compan

ently retur

dedicatedrvice Chates in 201work by i

’s 100 Bes6th (2011).

s were onntucky wamer Loyalent way ber servic

7%, comp

ew dramatce in Sans at the Lansion,

then the indus ppos, said vering thestill nurtu

appos Deliv

/watch/?id=

Laura Winig,

hool, Rev: Ja

imes, intervi

01/10/busine

1

mer Se

s was in t

. He types

I will watc

s, but betwsentative ion movie.

omer servi’s toll-freenquiry. Ifwebsites ay? No, bec

n to Zappo

service to p in 200. And it’sts employe Companie

a par witehouse staty Team styond the n. Employered to an i

cally, reacFrancisco,s Vegas hcompanytry. In fact “If we gevery bested, even a

rs Happiness

554219n

“Zappos.co

uary 23, 201

ew by Adam

ss/10corner.h

Bl

vice

is movie w

“Cries in t

h it with y

een a cust patientlyIt is note of theumber, a

Zappos d d recomm

ause custo

s.com.

customers and toppot only a ges. Zapposs to Work

the indusf, with salarted fromorm, imprees were aldustry ave

hing US$1it has becadquartersas able toZappos pr

the cultur customerfter Zappo

,” June 6, 20

2009: Cloth

0, p.7

Bryant, “On

tml?pagewan

e Ocean

ho had the

e dark” i

u. We are

mer servicelping the personal

nline shoeustomer sees not haend that th

ers appre

. It wased the besood compadebuted a

For in 200

try standar ries startinS$11 per

ssing custoo happy aage of 150

billion inme one oand the K cultivate aioritized ce right, moervice, wi was acqu

0,

ing, Custome

a Scale of 1

ted=all&_mo

Strategy I

02/2

e boots? I

to the sea

going to fi

representashopper fishopper sstore Zap

rvice repree the exa

e customeriate and re

anked sevt customer ny for cust 23rd—the. Since the

d. The ma from US$our, altho

mers with t work—th%.

2

revenue w the biggentucky Fuunique cullture overst of the stl just takeired by A

Service and

to 10, How

.semityn.ww

nstitute

013-5932

it

ch

nd

tive andd a pairrvice atos.com.entativet shoes

buy themember

enth byservicemers; ithighest

n, it has

ority of8.25 pergh theirheir fast

annual

ithin 10t onlinefillmenture thatnythinguff, likecare ofazon in

Company

eird Are

w


3/8

D o N

o t C

o p y o r

P o s t


Copyrig

The Z

Tony Hcapital

sold himillionhad star officesgrowth,increasyears,

“

jo

hi

m

c

Withouwho wahe begaTony cand 80a new v

Core

ZapposSan Frathe Linthe emcorpora

Zapposdictatinvalues tand it tthat pe

employ

These cthe basitest whassesse

4 Ton

t © 2013 INS

appos

sieh joinedirm he co-

co-found in 1998. Lted LinkEin ChicagoTony fou

d, it becaade millio

s we gre

ining the

red were

otivated b

reers and

noticing,nted to ben to dreaduld expectof that if

enture.

alues

had no cor ncisco toExchangeloyees, par tions were

engaged e it top-do

o which alok over a ple could

ees, descri

ore valuess for hiringther the ap the appli

y Hsieh, Deli

AD

ulture

Zappos inowned wit

d internetike many d change inand Newd that he

e just anots, and the

beyond 2

ompany fo

mart and

the pros

ésumés.”

the cultureart of builoing to w

a US$40he walked

e values inas Vegas,mistake. Ttners, anditualistic a

ery emplon. Tony s

Zappos pear to gatact upon

ing each in

were neith and firing

plicant fit tant’s rele

vering Happi

1999 by in Alfred Li

dvertisingotcom sucheir San Fork and h

no longerer Siliconretired.

people, w

r other re

motivated.

ect of eit

of the coing sometrk. Out ofillion payway. Not

the beginnhiring manony needeustomers,d difficult

ee in identnt e-mailsople wereer suggestithem. In

detail. (Se

r ideal nor people. In

e Zapposant experi

ess (New Y

2

esting US. He was

company,ess storiesancisco flairing a lar enjoyedalley fir

e made the

sons. The

The bad

er making

Ton

pany – heing fun anthe US$26out if he stithstandin

ing. Six yey new peo to set guiut he felt tto associat

ifying andto all emplwilling toons, filter t006, Tony

Exhibit 1)

abstract; the hiringulture. (Sence and t

rk, NY: Busi

Bl

500,000 fr young mi

LinkExcha Tony andt in 1996.e numbersorking for where sm

mistake o

ood news

ews was t

a lot of

Hsieh, D

started ou exciting4 –

5 million aayed at Li the financ

ars later, wle along t

delines thahat missio with their

building thoyees, askiommit. E-em, and li

finally se

ey were arocess, Zae Exhibit 2chnical ca

ess Plus, 20

e Ocean

om Ventur lionaire en

nge, to Mihis schoolt grew expof people.LinkExch

rt people

hiring peo

was that t

hat many

oney or

livering H

by hiring – was deter cquisition d kExchangeal incentiv

hen the coe way, it s identifiedstatement

everyday

e companyng them tomails werest them innt the ten

tionable. Z pos ran a) Though tability, th

0), p. 47.

Strategy I

02/2

Frogs, thetrepreneur

rosoft forate Sanja

onentially,Despite th

ange. As torked hard

ple who w

he people

f them w

uilding th

ppiness, p.

friends aniorating. Dieal with M for one m, he left to

pany moought not tZappos cu and core

perations.

s culture icome upsent sever common lcore valu

appos usedultural intee general i cultural i

nstitute

013-5932

ventureho had

US$265Madan

openings stellare scalefor four

re

e

re

ir

47

peoplespirited,icrosoft,re year,look for

ed fromo repeatlture foralues of

stead ofith corel times,

anguages to all

them asrview toterviewterview


4/8

D o N

o t C

o p y o r

P o s t


Copyrig

screeneexisting

During

regardlnew ethe traito Zapcash.5 Tclear disigned

Everyfeelingsemployemploy

Empl

ZapposWhileunpleasstaff maskingcondolefor a cknowleand em

Zappos

ZapposWorkstrainforeother ethe mai

peopleManagthe offi

In 200

employe-mail,languag

5 Nil

t © 2013 INS

the appli employee

their induc

ss of job t ployee uning, Zappos, only 2– his was threction in pledge to

ear, a Za about woees took oees, Zappo

yees

customerthe positiant job thambers, giva supervisnces to cunversationge and ca

otional co

experienc

nurtured ations werest or chee ployees on receptioto hang ars were ene.

, during t

ees to redu blogs ande to expla

sha Sharma,

AD

cant’s crea’ performa

tion, all ca

tle. They serstood ths enticed s

–3% of pe final hurd he compa

respect the

pos Culturking at Z

nership a partners (i

service ren of cust requireding them f r or man

tomers if j. What Zaabilities wnection, o

, and get t

fun and cl in an opeleaders. E an open f area, inteound and

couraged t

he econo

ce costs. Twitter. Instn the lay-

“Online Foot

ivity and ice evaluat

didates w

pent at lea importanon-to-be e ple took te to filtery. Duringcore values

e Book ppos. Byd commit

ncluding v

resentativmer servio intelligell authorityger. For idged appr pos focusith customten going

ose custo

se-knit fa office, wien the CEoor. All eacting witshare idea spend 10–

ic downtu

e announcead of spinffs, the pr

ear Seller Z

3

ndividualitions.

nt through

t a week oe of perso ployees te offer, aut culturallthe gradua.

as publishtaking par ed to thendors), an

s were kece represece, Zappo

to make d nstance, C priate. Thd on wasrs online.above and

ers to retur

ily atmospth themedO did not ployees at

others. Ts rather t

–20% of th

n, Zappos

ement wasning termsocess, and

ppos.com,”

Bl

. Cultural

the same f

n the phonal emotio ‘quit’ witd the othey incompation cerem

ed in whi in establompany.the gener

to connetative wa cherished cisions usiT staff cre was noletting thehey were

beyond to

n.

here and faecorationshave a cor the Las Vehe free luan simplyir time wi

made a d

upfront anlike “stratecompensat

mity Resear

e Ocean

fit also ac

our-week t

with custal connect a US$3,0

r 97% choible peopleony, new e

h all empshing thehe bookl public. (S

ting withs often sethe intelle

ng their beuld send

script to pa do their

encouraged gratify cu

cilitated oin each dener office,gas headquch and snfeeding e

h their tea

ecision to

straightfoic restruct

ion. By o

h Center, 20

Strategy I

02/2

ounted for

aining pro

mers so thions. At th0 bribe. A

se the joband to giv

mployees

oyees shar company’sas availab

ee Exhibit

appos’ cuen as a ltual wortht judgmenta birthdayrrot or limi best to sh to build atomers, sp

en commu partment, s

working aarters wentck bar enmployees

member

lay off 8

ward, sentring”, it u

ening up t

9, p.8

nstitute

013-5932

50% of

ramme,

at everye end ofcording

over thee them aead and

ed theirculture,

le to all3)

stomers.w-paid,of CLTwithoutcard orted timere their

personalread the

ication.uch as alongsidethroughouragedor free.outside

of its

throughed plainrust and


5/8

D o N

o t C

o p y o r

P o s t


Copyrig

commuExhibit

Partn

Tradititypical

buy theIt had awere sincludiagainstInsteadretailer level. Tway, v

They alFrom d invitedtheir cothan 1,

believevendorsonly be

Ques

1.

Hoorg

2.

Ho

6 Twi

http

7 Hsi

8 Ton

Net

t © 2013 INS

ication a4)

rs

nally, buyto ignore tmeals.7 Inmanagemld on Zapg pricing asuppliers.of receivin, Zappos’hey couldndors bec

so voluntaesigning avendors tontribution,00 vendor they woul helped pr found on

tions fo

did Zapnization?

easy is it

tchell Jerem

://www.lasve

h, Deliverin

y Hsieh, “A

ork,” http://

AD

ong empl

rs used their phone

contrast, Znt networ

pos.com bnd marginsappos un

g merchanendors logthen moveme Zappo

ily particirand bouti

collaborateZappos or . By treatid spend mcure invenappos.

Interac

pos create

o imitate t

, “Workplac

gassun.com/n

Happiness,

essons from

blogs.hbr.org

yees, they

eir positiocalls, mak ppos built

called thesed on st

, is kept coeiled suchise orders

ged into thquickly to

s’ most kn

ated in mque on the, recognizianized ang vendorsre hours htory for ho

tive Cla

trust, co

e Zappos’

e fun is the

ews/2009/jan

. 185.

Zappos: Fol

cs/2010/06/a

4

were not

s of powe them waitopen and cExtranetle, size, a

nfidential tinformatiofrom Zapp Extranetmaintain i

owledgeabl

rketing thwebsite tog their abinnual Venlike familylping Zapt-selling it

ss Disc

mitment

strategy gi

shoe that

/26/zapposco

ow the Gold

lesson_from

Bl

fraid of r

to treat v for sched llaborativhere vend nd colour.o leverage

to engagos buyers,nd checkeventory o

e merchan

ir product planning aity to run tdor Appre and respeos than thems and pr

ssion:

nd volunt

en its cult

its at Zappo

/

n Rule,” Ju

zappos_foll

e Ocean

aching acr

endors likeled appoin relationshirs could s Normally,the retailer’ suppliersas they wo their sales mark doiser of th

sold on t on/offlin

he businesiation Partting theirtypical accvided uniq

ary coope

re and peo

s,” Las Veg

e 4, 2010, p

w_th.html

Strategy I

02/2

oss job titl

the enemtments, ma

ps with itse how ma

sales infos bargaininat a differeuld with tr data and in products brand at

e Zapposcampaign

. In apprec, and invitapabilities,ount.8 For iue items th

ation dee

le practice

as Sun, Jan.

st on blog “

nstitute

013-5932

es.6 (See

: it waske themendors.y shoes

rmation,g powernt level.ditionalventory. In thisno cost.

website.Zappos

iation ofed moreZappos

nstance,at could

in the

s?

26, 2009,

BR Blog


6/8

D o N

o t C

o p y o r

P o s t


Copyrig

As we g

from whvalues t

1. 2.

3.

4. 5. 6.

7.

8.

9.

10.

The ap

The ap

The ap

9 Hsi

t © 2013 INS

ow as a co

ich we deveat we live b

Deliver WOmbrace anreate Fun

Be Adventuursue Gro

Build OpenBuild a PosiDo More WBe PassionaBe Humble

licant is wil

ive me an

hat was th

ell me abouties and s

licant is m

ould youexample?

f it was yourocess mor

licant is wil

hat’s an e

hen was t

h, Deliverin

AD

pany, it has

lop our cul:

W ThroughDrive Cha

nd A Littleous, Creativth and Lear nd Honestive Team ath Lesse and Deter

ling to thin

xample fro

e best mista

ut a time ylved withou

re creative

say you are

r first day o fun, what

ling to take

ample of a

e last time

Happiness,

become mo

ure, our br

Servicege

eirdnesse, and Openingelationshipd Family S

ined

Sample I

k and act o

your previ

e you made

u recognizt being aske

than the av

more or les

the job atould you d

risks in try

isk you too

ou broke th

. 172

5

Exhibit 1

ore Valu

re and more

nd, and ou

-Minded

s with Comirit

Exhibit 2

terview

tside the b

ous job(s) w

on the job?

d a probled to. What

erage perso

s creative t

appos andfor those e

ing to solve

in a previo

e rules/polic

Bl

s

important t

r business s

unication

uestions 9

x.

here you ha

Why was it

/area to ias it, how d

n.

an the aver

our task waght hours?

a problem.

s job? Wha

to get the j

e Ocean

o explicitly

trategies. T

to think an

the best?

prove thatid you do it?

ge person?

s to make th

t was the ou

ob done?

Strategy I

02/2

efine the co

ese are the

d act outsid

as outside

Can you gi

e interview/

come?

nstitute

013-5932

re values

ten core

the box.

your job

e me an

ecruiting


7/8

D o N

o t C

o p y o r

P o s t


Copyrig

Date: NFrom: TTo: AllSubject:

To all Z

Today habout 8addition

Kentuck This is othe right

We feelramificameetingexpense

Jason Chighly r

Fortunatother co

And weKeyBaneconomi

10 The

Dec

http

eve

11 Hsi

t © 2013 INS

vember 6, 2ony Hsiehappos EmpUpdate

ppos emplo

as been a to of our e

, we are als

y.ne of the ha decision fo

fortunate ttions of thefor all of t as much as

lacanis alscommend r

ely for Zap panies, we

are also fo. This line

c uncertaint

image was

ember 08, 20

://qualityserv

-business-rea

h, Deliverin

AD

008

loyees

yees:

gh, emotio ployees. To looking a

rdest decisi the long ter

at we havtough econeir portfoli possible an

has a welleading.

os, we’re i are still gro

tunate thatof credit h, we believ

taken from

9, post on bl

cemarketing.

ding.html

Happiness,

Zapp

a

al day for ee layoffsclosing so

ns we’ve ham health of

Sequoiamic times t companies get to prof

-written em

n a much bing and alr

e have a r s given usit’s pruden

Sybil F. Ste

og “Quality S

blogs.com/qu

. 191 – p.19

6

Exhibit 3

s Culture

Exhibit 4

-off e- a

eryone at Zill affect ale of our b

d to make othe compan

apital as ahat lie ahea (includingtability and

ail that talk

etter positioeady profita

evolving lina lot of finat to reduce o

shic, “Zappo

ervice Marke

ality_service

.

Bl

Book 10

il 11

appos. Wemost everyrick and m

er the past. The rest o

investorfor all ofappos), w

cash flow p

s about avo

n than man ble and cash

e of creditncial flexibur reliance

s Culture B

ting,”

marketing/2

e Ocean

ade the har single departar outlet

9.5 years, b this email

ho had thes. On Octoich one ver sitive as so

ding the “d

other com flow positi

rom wellslity. Howevn debt finan

ok: Best Ev

09/12/zappo

Strategy I

02/2

choice of ltment at Ztores in Ne

t we believill explain

foresight ter 7, Sequo clear mesn as possibl

eath spiral,”

panies. Unlie.

argo, US Ber, given thcing.

er Business

-culture-boo

nstitute

013-5932

aying off ppos. Inada and

that it ishy…

see theia held aage: Cute.

which I

ke many

ank, ande current

Reading,”

-best-


8/8

D o N

o t C

o p y o r

P o s t


Copyrig

We’ve proactiv properly

Because

most otwe aretogetherhigher t

Becausereactiveweek se

We areoffering

In additiand 50

monthsIn doindecreasethe posithe econ

e-commin this t

Within t player i be slowanticipat

For theforecastinstead

I know tfamily c

I’ve bee policy r

These ar If youmanager

t © 2013 INS

ecided theely cutting, instead of

we are still

er companiorecastingour 2008 plan $1 billio

of all this,about it, weerance (or

offering toan addition

on, becausefor spouse

f COBRAall of this

, our costs f ion of haviomy in 200

erce growthugh econo

he footwear any marker. Historicae for that to

est of 2008are that wef reactive i

hat many telture, our l

asked bymains the s

e tough timave any qu. For all oth

AD

ight thing t back some

eing reactiv

growing a

s of our sizo do aboutan at the en.

we are redu are able too severance

pay each lal amount fo

our regularand depen

ayments.to take careor 2008, butg a lot mor .

has slowedic environ

category,have an op

lly, we havcontinue in

as well as f will contin managing

rs were sheyoffs are m

ome emplome as it’s al

s for everyoestions aboer questions,

o do for theof our expee and waiti

d are alrea

. Last year,$1 billion i of 2007,

cing our statake care of) that most

d-off empl employees

health beneents, we de

of laid-offwe feel thisfinancial f

ompared toent, e-com

e are the oortunity toactually g009.

r 2009, wee to be prour business

d today, botch tougher

ees whetheways been:

ne, and I’mt your spe

comments,

7

company inses todayg until we a

y profitable

we did $84n gross mer e were exp

ff by 8%, bour employther compa

yee througthat have be

its cover 10ided to off

employees,is the right texibility in

its growth r erce overall

line marketgain evenown faster

anticipate citable and cand financia

h by laid-of emotionally

it’s okay t just be real,

sure there wific job or

or thoughts,

Bl

to be proaso that wee forced to

, we do not

mm in groschandise sacting our g

t becauseees and offeies are givi

the end oen with us f

% medical,r to reimbu

we expecthing to do f

being able t

ate a year a is still grow

leader. Whore markethan the ove

ntinuing tosh flow pols.

and non-laithan they w

Twitter aband use you

ill be manydepartment

please feel

e Ocean

ctive insteacan take caut expense

have to tak

s merchandies. Howeveoss mercha

e are beinr them mor g.

the year (ar 3 or more

dental, andse laid-off e

hat it willor our emplo respond t

o, but the ging.

en times ar hare, even irall e-com

grow year oitive, as lon

d-off emploould be at m

out what’s g best judge

follow-up q please talree to email

Strategy I

02/2

of reactivere of our e.

e as drastic

e sales, and r, when wedise sales t

proactive i than the st

bout 2 monyears.

vision for employees f

ctually incr yees. It will potential c

od news is

tough, thef overall gr erce market

ver year. Og as we are

yees alike.any other co

oing on. Ouent.

estions to t to your deme.

Tony Hs

nstitute

013-5932

. We are ployees

a step as

this yearfirst put be even

stead ofndard 2-

ths), and

ployeesr up to 6

ease, not put us inanges in

that even

strongestwth may, and we

r currentroactive

iven ourmpanies.

r Twitter

is email. partment

ieh, CEO

Zappos.com (B)

Documents

Transcript of Zappos.com (B)