Zappos Business Model

 

Zappos Business Model

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Zappos Business Model

Zappos is an online shopping stall that was initially selling shoes only, but has since developed to include more products. The organization is one of the most stable and profit making online businesses. They have a unique culture and way of doing business. Their primary target is that of satisfying the people involved. This paper, therefore, looks at Zappo’s business model and unique culture.

Zappo’s leadership is one that puts humanity first and business second. Their business model focus more on human satisfaction. The culture cultivated into the employees is that of family hood, where every employee feels like they are part of a larger family. Other business organizations can learn a lot from Zappo’s model. One valuable lesson that companies can learn from Zappos is the importance of putting humanity before success (Burkus, 2011). Keeping everyone happy will always generate more profits than just targeting high profits without considering the humans involved. Another aspect that businesses can emulate is the need to ensure that clients are committed to their work rather than just working for the sake of money (Goleman, 2000). In Zappos, for example, people undergo training, after the training, and they are offered $2000 to quit. This will eliminate those whose interest is only making money.

Zappo’s leadership and ethical practices have had significant impacts on stakeholders. Traditionally, profits were the primary goal for any business organizations. The management of many companies has always been profit focus. Zappos, however, managed to change that mentality and prove that humanity should come first. Zappos has put the interest of their employees as well as their customers first and profit second. This has had surprising results as their profits have been increasing as each day passes. In doing this, Zappos has managed to kill two birds with one stone. They have successfully managed to satisfy the clients, the employees, and the stakeholders while at the same time maintain high profits. This has since changed the way in which management is approached.

Zappos has faced some significant ethical challenges its lifetime. Some of these challenges have threatened to bring down the culture and the trust that customers have for the company, and the relationship that Zappos has taken so long to build. One of these challenges was the advertisement that they carried out, in which the models were depicted to be nude. That advert attracted wide criticism from the customers, as most of them regarded it to be sexual. In the advertisement, the models appeared to be nude, with boxes covering certain parts of the models’ bodies. These boxes read ‘More than just shoes”. In reality, the models were not made, but were dressed in bathing suits or small shorts. This advert threatens to take down the relationship between Zappos and its esteemed clients. Zappos has firmly established itself as a company that upheld high moral standards as well as being humane. To address this, Zappos took down the advert and apologized (Joshua & Cowley, 2013). The company marketing team needs to be more careful and considerate when coming up with adverts in order to prevent future criticisms.

Another ethical challenge that Zappos faced was the technical difficulty in their system. At one point, their systems experienced technical difficulties. This resulted in delays in orders. Some orders were even deleted from the system. Because of this, customers were upset. Some orders were sent to the wrong addresses while some got lost. Zappos assured their clients that everything will be sorted out. On another affiliate website, there was a uniform pricing on all orders for some time, which led to Zappos closing down the site for a few hours. This resulted in the loss of over $1.6 Million since they were forced to honor all the orders that were placed under the wrong pricings. This is a major challenge that most organizations face. System breakdown is a common problem. In order to prevent this, Zappos should develop sub-systems that can be used when their primary systems undergo upgrades or maintenance. They should also ensure that their device a way to stop the loss in case of wrong pricing by using more than one server.

Zappos, like many other systems, is always a target for hackers. This is mainly because of the information that they hold in their servers. The company contains very vital information in the servers, such as credit card information, which hackers can use to steal money. Zappos experienced a hack attack. The servers were hacked, and personal information of many of their clients was taken. Zappos, anticipating a lot of calls from clients, decided to switch off their call center. This did not go down well with the clients, who felt that their concerns were being ignored (Joshua & Cowley, 2013). Zappo had, however, sent emails to its customers informing them of the attack and assuring them that the server that holds vital credit card information had not been attacked.  In order to prevent such shortcomings, Zappos ought to employ competent teams of ethical hackers who will regularly check their systems for any vulnerability that hackers may want to exploit. This will make their systems very secure and prevent further attacks from malicious hackers. They should also keep their lines open for any client to raise their concerns in case of any arising issues.  This helps enhance their commitment to transparency and their relationship with the customers.

Zappo’s core value is to make everyone happy. They strive to satisfy all involved parties and make them party while at the same time being mindful of the standards, as well as the productivity of the company. This is a very effective policy. Unlike other organizations that focus solely on profits, Zappos focus on the happiness of the humans first, then profits come second. Psychologically, people will produce their maximum output when they feel wanted and appreciated. Companies that make their employees happy normally get better output. This is what happens with Zappos. The company records high profits despite putting in so many resources in satisfying their employees. The employee produces their maximum best when they are happy (Joshua & Cowley, 2013). Customer satisfaction is another major point in the Zappos policy. They strive to make their customers as happy as possible. This has led to increasing their customer base. The 365-day return policy, for example, is an important attractive point for customers. The free shipping back cost is also another interesting point. Customers have therefore felt more comfortable working with Zappos as they know they will get the best services, as well as value for their money. The stakeholders of a company are always interested more in profits. The profits are the driving force of the enterprise. The core values of Zappos, therefore, support the stakeholders, perspective my ensuring high profits for the enterprise. High profits will always satisfy the stakeholders regardless of the means used to obtain them. The values of Zappos, therefore, have helped to uphold good customer relationships, which has been the key to the high profits that the company records.

Zappos, like all other organizations, have faced significant ethical challenges. The biggest challenge is the challenge to satisfy all parties involved. A good example is when the company was sold to Amazon. The customers became concern that Zappos would lose its identity. In this, the management did excellently well to address their concerns and uphold the trust that clients had for the company. Another challenge they faced is when they were hacked. In this, Zappos made a wrong move in switching of their call center because of the anticipated high number of calls from clients. The management should have acquired external help to assist them in handle the high number of incoming calls. This would ensure transparency in their dealings. Switching off the call center threatened to derail the trust that clients had for the company. Clients would question the goodwill of the move regardless of whether they sent emails or not. Another challenge that they faced is the technical problem, for example, when their system listed all the items at equal prices. In this, the Zappo’s move was brilliant. The management made the right decision in accepting that the mistake was on their side and compensating the customers for it despite the fact that this would lead to a loss in their organizations. Most organizations would not accept to take the blame for the loss and would instead revoke all the orders and require customers to place new orders under the correct pricings. The management also did well to handle the situation of deleted orders and delayed orders. Communication to clients is a very important part of the business. Communicating with the customers informing them of the delays in processing of orders was essential in maintain their trust instead of waiting for them to complain.

 

 

References

Burkus, David (2011) “A Tale of Two Cultures: Why Culture Trumps Core Values in Building

Ethical Organizations,” The Journal of Values-Based Leadership: Vol. 4: Iss. 1, Article 6.

Retrieved from http://scholar.valpo.edu/jvbl/vol4/iss1/6

Joshua, E., Cowley, D., (2013) Servant Leadership at Zappos.com, Inc., 239

Retrieved from http://search.proquest.com/docview/1467750823

Denning, S. (2011). The Reinvention of Management. Strategy & Leadership, 39(2), 9–17.

Goleman, D. (2000). Leadership That Gets Results. Harvard Business Review, 78(2), 78–90.

Groth, A. (2012a, September 21). How Zappos CEO Tony Hsieh Will Change Las Vegas

Forever. Business Insider. Retrieved April 13, 2013, Retrieved from

http://www.businessinsider.com/how-tony-hsieh-will-change-las-vegas-2012-9

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