Business Finance
Southeastern University Zappos Internal Environment Case Study Presentation

Southeastern University

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Presentation • This is an individual assessment, which is a part from your course score. You should summarize your analysis of case study in a set of PowerPoint slides Case Study 4: Zappos Tony Hsieh’s first entrepreneurial effort began at the age of 12 when he started his own custom button business. Realizing the importance of advertising, Hsieh began marketing his business to other kids through directories, and soon his profits soared to a few hundred dollars a month. Throughout his adolescence, Hsieh started several businesses, and by the time he was in college he was making money selling pizzas out of his Harvard dorm room. Another entrepreneurial student, Alfred Lin,bought pizzas from Hsieh and resold them by the slice, making a nice profit. Hsieh and Lin quickly became friends. After Harvard, Hsieh founded Link Exchange in 1996, a company that helped small businesses exchange banner ads. A mere two years later, Hsieh sold Link Exchange to Microsoft for $265 million. Using the profits from the sale, Hsieh and Lin formed a venture capital company that invested in start-up businesses. One investment that caught their attention was Zappos, an online retailer of shoes. Both entrepreneurs viewed the $40 billion shoe market as an opportunity they could not miss, and in 2000 Hsieh took over as Zappos’ CEO with Lin as his chief financial officer. Today, Zappos is leading its market and offering an enormous selection of more than 90,000 styles of handbags, clothing, and accessories for more than 500 brands. One reason for Zappos’ incredible success was Hsieh’s decision to use the advertising and marketing budget for customer service, a tactic that would not have worked before the Internet. Zappos’ passionate customer service strategy encourages customers to order as many sizes and styles of products as they want, ships them for free, and offers free return shipping. Zappos encourages customer communication, and its call center receives more than 5,000 calls a day with the longest call to date lasting more than four hours. Zappos’ extensive inventory is stored in a warehouse in Kentucky right next to a UPS shipping center. Only available stock is listed on the website, and orders as late as 11 p.m. are still guaranteed nextday delivery. To facilitate supplier and partner relationships, Zappos built an extranet that provides its vendors with all kinds of product information, such as items sold, times sold, price, customer, and so on. Armed with these kinds of details, suppliers can quickly change manufacturing schedules to meet demand. Zappos Culture Along with valuing its partners and suppliers, Zappos also places a great deal of value on its employee relationships. Zappos employees have fun, and walking through the offices you will see all kinds of things not normally seen in business environments—bottle-cap pyramids, cotton-candy machines, and bouncing balls. Building loyal employee relationships is a critical success factor at Zappos, and to facilitate this relationship the corporate headquarters are located in the same building as the call center (where most employees work) in Las Vegas. All employees receive 100 percent company-paid health insurance along with a daily free lunch. Of course, the Zappos culture does not work for everyone, and the company pays to find the right employees through “The Offer,” which extends to new employees the option of quitting and receiving payment for time worked plus an additional $1,000 bonus. Why the $1,000 bonus for quitting? Zappos management believes that is a small price to pay to find those employees who do not have the sense of commitment Zappos requires. Less than 10 percent of new hires take The Offer. Zappos’ unique culture stresses the following: 1. Delivering WOW through service 2. Embracing and driving change 3. Creating fun and a little weirdness 4. Being adventurous, creative, and open-minded 5. Pursuing growth and learning 6. Building open and honest relationships with communication 7. Building a positive team and family spirit 8. Doing more with less 9. Being passionate and determined 10. Being humble Zappos’ Sale to Amazon purchased Zappos for $880 million. Zappos employees shared $40 million in cash and stock, and the Zappos management team remained in place. Having access to Amazon’s world-class warehouses and supply chain is sure to catapult Zappos’ revenues, though many wonder whether the Zappos culture will remain. It’ll be interesting to watch!19 ...
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Final Answer


Zappos Case Study

Zappos environment


Zappos is a Spanish variation of the word Zapatos meaning shoes.

The Co-Ceo of Zappos are Nick Swinmurn and Tony Hsieh.

Tony Hsieh began a button custom business at the age of 12 showing his entrepreneurial efforts.

He used directory marketing of his business to other kids and he began making profits within the first month.

When he joined college, he started selling pizzas from his dorm room in Harvard. Alfred Lin who was also a
student joined Hsieh by buying pizzas from him and resold them by slices.

They became friends and in 1996 after college Hsieh founded Link Exchange.

The company helped the small businesses in exchanging banner ads.

➢ Hsieh sold the company after two years to Microsoft for $265 Million.

➢ From the profits, the two formed a venture capital company that invested in business start-ups.
➢ From their investments, one of the online shoe retailers, Zappos, caught their attention.

➢ They both viewed it as an opportunity they could not miss which was a $40 billion shoe market.
➢ Hsieh took over in 2000 becoming the CEO and Lin the Chief Financial Officer.
➢ In 2001, through the sustained efforts, the company produced $8.6 million gross sales
➢ The gross sales elevated to $32million in 2002 and $70 million in 2003.
➢ In 2004, the gross sales rose by more than double to $184 million.

➢ Zappos is the leading in the market by offering 90,000 and more handbag styles, clothing and 500 and
more brands of a...

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