Tony Hsieh, Zappos’ CEO says, “It’s a brand about happiness, whether to customers or employees or even vendors.” Zappos’ zany corporate culture and focus on customer satisfaction has mad
Trang 1MINISTRY OF EDUCATION AND TRAINING
NATIONAL ECONOMICS UNIVERSITY
BUSINESS ETHICS INDIVIDUAL ASSIGNMENT
Lecturer: Nguyen Bich Ngoc
CASE STUDY 08: ZAPPOS DELIVERING
CONSUMER SATISFACTION
Student : Tran Tra Giang
Student’s ID : 11221844
Class: International Business Management (64A)
School of Advanced Education Programs ( AEP)
Trang 2
-000 -TABLE OF CONTENTS
A DISCUSSION 3
1 INTRODUCTION 3
2 HISTORY 3
3 CORE VALUES 4
4 ZAPPOS’ CUSTOMER-FOCUSED BUSINESS MODEL 4
4.1 SHOPPING AND SHIPPING 4
4.2 CUSTOMER SERVICE 5
4.3 TRANSPARENCY 5
4.4 ZAPPOS INSIGHTS 6
4.5 CORPORATE CULTURE 6
4.6 WORK ENVIRONMENT 6
5 CORPORATE SOCIAL RESPONSIBILITY 6
5.1 PHILANTHROPY 6
5.2 SUSTAINABILITY 6
5.3 RECOGNITION 7
6 ETHICAL CHALLENGES FOR ZAPPOS 7
6.1 2008 LAYOFFS 7
6.2 ACQUISITION BY AMAZON 8
6.3 MORE THAN SHOES CAMPAIGN 8
6.4 TECHNICAL DIFFICULTIES 8
6.5 THEFT OF CUSTOMER INFORMATION 8
7 THE FUTURE OF ZAPPOS 8
B QUESTIONS 9
QUESTION 1: 9
QUESTION 2: 11
QUESTION 3 11
Trang 3A DISCUSSION
1 INTRODUCTION
Can a company focused on happiness be successful? Zappos, an online retailer, is proving it can The company’s revenue grew from $ 1.6 million in 2000 to $ 1.64 billion a decade later Tony Hsieh, Zappos’ CEO says, “It’s a brand about happiness, whether to customers or employees or even vendors.” Zappos’ zany corporate culture and focus on customer satisfaction has made it both successful and a model for other companies
This case examines how Zappos’ focus on stakeholder happiness contributed to its success First, we examine the history of Zappos, its core values, and unique business model Next,
we analyze the company’s corporate culture and how it influences its relationships with employees, customers, the environment, and communities We then look at some of the challenges the company faced and how it plans to move into the future
2 HISTORY
In 1999, Nick Swinmurn founded Zappos after a fruitless day spent shopping for shoes in San Francisco After looking online, Swinmurn decided to quit his job and start a shoe website that offered the best selection and best service Originally called ShoeSite.com, the website was soon renamed Zappos, after the Spanish word for shoes (zapatos)
In 2000, entrepreneur Tony Hsieh became the company’s CEO After becoming CEO, Hsieh made an unconventional decision to keep Zappos going, even selling his San Francisco loft
to pay for a new warehouse and once setting his salary at just $ 24
In 2003, the company decided in order to offer the best customer service, it had to control the whole value chain – from order to fulfillment to delivery – and began holding its entire inventory
In 2010, Amazon bought the company for $1.2 billion Amazon agreed to let Zappos operate independently and keep Hsieh as CEO (at his current $ 36,000 annual salary) Hsieh made $
214 million from the acquisition, and Amazon set aside $ 40 million for distribution to
1999
2000
Trang 4Zappos employees After the acquisition, the company restructured into 10 separate companies organized under the Zappos Family
3 CORE VALUES
Zappos has ten core values:
They differ from those of other companies The core values create a framework for the company’s actions This is exemplified in the company’s commitment to their customers’ and employees’ well-being and satisfaction
4 ZAPPOS’ CUSTOMER-FOCUSED BUSINESS MODEL
The Zappos business model is built around developing long-term customer relationships Zappos does not compete on price because it believes customers want to buy from the store with the best service and selection The company strives to create a unique and addicting shopping experience, offering a wide selection of shoes, apparel, accessories, and home products, free shipping to the customer, free shipping and full refunds on returns, and great customer service
4.1 SHOPPING AND SHIPPING
Zappos strives to make the shopping experience enjoyable The website is streamlined for an easy shopping experience Its customized information systems and warehouses operating around the clock enable fast shipping, creating instant gratification for customers Unlike
Trang 5most companies, Zappos sees returns as an opportunity to maintain customer relationships and increase its profits The company offers a 100% satisfaction guaranteed return policy, allowing customers to return items within 365 days for a full refund Zappos provides customers with pre-paid shipping labels, allowing domestic customers to return items for free This return policy encourages customers to order multiple styles or sizes and return the items that don't work out This may seem expensive, but it actually works to Zappos' advantage as their most profitable customers tend to return 50% of what they purchase These customers are the most profitable because they've experienced Zappos' customer service and return policy, which creates loyalty to the company
4.2 CUSTOMER SERVICE
What makes the Zappos business model unique is the company’s focus on customer service The company established a method of serving customers and handling their issues distinctive from the rest of the industry Zappos believes great customer service is an opportunity to make the customer happy
Another key aspect of Zappos’ customer service model is that nothing is scripted Employees have free reign in their decision-making and are expected to spend as much time as they need
to “wow” customers They help customers shop, even on their competitors’ websites, encourage them to buy multiple sizes or colors to try (since return shipping is free), and do anything it takes to make the shopping experience memorable
The company considers word-of-mouth marketing to be the best way to reach new customers With over 75 percent of purchases made by repeat customers, it is evident Zappos’ mission to “provide the best customer service possible” works well for the company
4.3 TRANSPARENCY
Zappos values transparency and encourages open communication among stakeholders, including employees and customers CEO Tony Hsieh uses social media to share information with followers and was open about the company's layoff decision Zappos is not afraid of public criticism and has a positive reputation among customers on social media
Trang 64.4 ZAPPOS INSIGHTS
Zappos offers tours and workshops at their headquarters, as well as an online service called Zappos Insights, which allows subscribers to learn about the company's business practices through blogs and videos These programs have high profit potential for the company
4.5 CORPORATE CULTURE
The corporate culture at Zappos is unique and sets the company apart from others, attracting the attention of Amazon CEO Jeff Bezos CEO Tony Hsieh built the culture on the idea that attracting talented people who enjoy their work leads to great service and brand power
4.6 WORK ENVIRONMENT
Zappos' corporate culture is known for its relaxed and unconventional atmosphere, featuring activities such as office parades, ugly sweater days, and employee nap rooms The company believes that creating a fun environment leads to more engaged employees and fosters innovation
4.6.1 Hiring and Training
Zappos believes that creating a fun and engaging work environment starts with hiring the right people, and the application process reflects this New employees attend a five-week training program and are offered $2,000 to leave the company after the training Zappos also invests in ongoing employee education, offering 200 hours of classes and requiring the reading of at least 9 business books a year
4.6.2 Benefits
Zappos' corporate culture is focused on creating a positive and engaging work environment for its employees The company believes that by treating employees well and fostering a fun and relaxed atmosphere, employees will be more engaged, motivated, and loyal, which translates into better customer service and brand power Zappos' unique approach includes hiring people with a sense of humor and conducting extensive training and ongoing education for employees The company provides a comprehensive benefits package and a compensation model that incentivizes personal growth and development Additionally, Zappos encourages work-life integration by fostering friendships and socializing outside of work, and promoting trust and transparency in the workplace However, the company also has high expectations for employees, who are evaluated on their alignment with the organization's core values and vision, and who may be let go if they do not fit with the company's culture
5 CORPORATE SOCIAL RESPONSIBILITY
5.1 PHILANTHROPY
Zappos is involved in a variety of philanthropic efforts Programs include donating shoes and gifts as well as giving gift cards to elementary school students Zappos donates money to organizations such as the Shade Tree, a non-profit that provides shelter to women and children, and the Nevada Childhood Cancer Foundation Zappos also has a donation request application available on its website
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Trang 85.2 SUSTAINABILITY
Zappos started a campaign to improve the company’s impact on the environment A group of employees created the initiative, known as Zappos Leading Environmental Awareness for the Future (L.E.A.F.) It focuses on several environmental efforts, including a new recycling program, community gardens, and getting LEED certification for the company One recent effort was Zappos Recycles Day, an event to raise awareness on recycling and other ways the company can reduce its carbon footprint Like the rest of the company, L.E.A.F is open, with its progress posted on its Twitter account and blog Another area on the company’s blog is a section on “Eco-friendly Products.”
Here, the company highlights new products that are organic or manufactured using environmentally friendly procedures The postings also list ways customers can live more sustainable lifestyles, including tips on how to throw an eco-friendly party and green product recommendations
5.3 RECOGNITION
Zappos has been recognized for its innovative business practices and has appeared on prestigious lists such as Fortune's "Best Companies to Work For," Fast Company's "50 Most Innovative Companies," BusinessWeek's "Top 25 Customer Service Champs," and Ethisphere's "World's Most Ethical Companies." The company's efforts to create an environment and business model that encourages transparency and strong relationships among all stakeholders continue to be recognized
6 ETHICAL CHALLENGES FOR ZAPPOS
Like any company, Zappos faced some challenging business and ethical issues in the past When these issues occur, Zappos handles situations in a professional and efficient manner
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Trang 96.1 2008 LAYOFFS
In October 2008,Sequoia Capital instructed Zappos to cut expenses and make the cash flow positive As a result Hsieh made the difficult decision to lay off 8 percent of Zappos’ employees
Zappos strived to handle the layoffs in a respectful and kind manner
6.2 ACQUISITION BY AMAZON
In 2009 Zappos was acquired by e-comerce giant Amazon.com Shorly after the acquisition, Hsieh issued a statement about why he sold Zappos to Amazon In the statement, Hsieh discussed the disagreement between Zappos and Sequoia Capital over management styles and company focus
Hsieh decided the best way to resolve these issues was to buy out the board, but he could not
do this on his own After meeting with Amazon CEO Jeff Bezos, Hsieh committed to a full acquisition, as long as Zappos could operate independently and continue to focus on building its culture and customer service
6.3 MORE THAN SHOES CAMPAIGN
To bring awareness to the fact Zappos sells more than just shoes, Zappos created a marketing campaign in 2011 designed to catch people’s attention The creative advertisements had certain parts of models’ bodies blocked off with a box with a box that said “ more than shoes
”
6.4 TECHNICAL DIFFICULTIES
In October 2011, Zappos experienced some technical difficulties that resulted in delays and problems in customers’ orders and shipments Zappos upgraded one of its processing systems, and in the process many orders were deleted or delayed Some orders had the incorrect shipping information, and products were shipped to the wrong location
Another problem Zappos encountered was that every item from 6pm.com, one of its websites, was priced at $49.95 for six hours in 2010 The company shut down the website for
a few hours to solve the problem Zappos honored all the orders from the pricing mistake, which resulted in a $1.6 million loss
6.5 THEFT OF CUSTOMER INFORMATION
In January 2012 hackers broke into Zappos’ computer system and the company had to respond to the theft of 24 million customers’ critical personal information The stolen data included customers’ names, email addresses, shipping and billing addressed, phone numbers, and the last four digits of their credit cards
Zappos immediately addressed the situation by sending an email to customers notifying them
of the security breach Zappos assured customers the servers containing their full credit card information were not hacked Zappos’ next move was to disconnect its call center, reasoning that the expected amount of calls would overload their system
7 THE FUTURE OF ZAPPOS
Zappos remains commiteed to serving its customers and employees So far, the company has retained its unique culture and continues to expand into new product categories
Trang 10In recent interview, Hsieh talked about the growth of Zappos and how he believes expanding into the clothing and merchandise market will help the company to grow Hsieh says “ the sky is the limit for Zappos”, and growing and expanding into many different types of business is Zappos’ future
Ultimately, Zappos intends to continuw to deliver happiness to its stakeholders Hsieh says, “
At Zappos, our higher purpose is delivering happiness Whether it’s the happiness our customers receive when they get a new pair of shoes or the perfect piece of clothing, or the happiness they get when dealing with a friendly customer rep over the phone, or the happiness our employees feel about being part of a culture that celebrates their individuality, these are all ways we bring happiness to people’s lives
B QUESTIONS
Question 1: Does Zappos effectively focus on stakeholder happiness, and how does this approach affect the ethical culture ?
Yes, Zappos effectively focused on stakeholder happiness
Zappos is the online retailer of various kinds of shoes and its brand is linked in making people satisfied and happy The stakeholders of the company are given priority and their interest and expectations are met The company primarily focus on the happiness of its stakeholders as it realises that stakeholders are the main driving force of the business It makes every effort to understand the need of the stakeholders and tries to provide every opportunity to keep them happy Its effectiveness have been shown in :
1 Customer reviews and testimonials: Zappos has a strong reputation for providing exceptional customer service and going above and beyond to ensure customer satisfaction Numerous customer reviews and testimonials attest to the positive experiences and happiness that Zappos' customers have had These reviews often highlight the personalized attention, helpfulness of customer service representatives, and overall positive shopping experiences