Zappos: A Culture in Its Own Entity

Running Head: Zappos: A Culture In Its Own Entity 1

Zappos: A Culture In Its Own Entity

"Thousands of candles can be lit from a single candle, and the life of the candle will not be short- ened. Happiness never decreases by being shared." ~Tonu Hseih

Introduction: Overview of Organization

Zappos is an internet based shoe company that has blossomed over the years since 1999. They have ventured on to more than just shoes, servicing the public with offering things like acessoreis , handbags, watches, clothing, and even home goods. Zappos has won such honorary awards as being ranked as number 6 on Fortune's list of Best Companies to work for in 2011. This company is not committed to gaining profit from its products, but they would rather be known for their great customer service, and to "just so happen to sell shoes".(Hsieh, 1999) They go above and beyond for their consumers and employees, offering great benefits and even gifts to their customers. Zappos has developed their own company culture and core values and it has in return made them one of the most successful businesses of our day and age.

In the late 90's, a man named Nick Swirnmurn went searching for a pair of brown airwalks at the mall one day and was relunctant to find nothing. Out of frustration he called up one of his business partners with the idea of selling shoes online. Nick was interested in providing shoes for all walks of life in all sorts of styles, shapes, and sizes. He wanted to sell not just regular shoes, but also shoes that weren't so easy to find. He knew that in the US shoe sales totaled a profit of $40 billion dollars and 5 % of that came from shoes being sold in traditional catalogs. Nick pitched this business venture to Tony Hseih and Alfred Lin. These two business men where over the investment firm Venture Frogs. They decided to invest $500, 000 in the idea after hearing its possible profits. In June of 1999 the new website appeared and it was called shoesite.com. In the year 2000, the new website brought in 1.6 million dollars. His business partner Tony Hseih being happy with its success, then became co-ceo of the company, which they then changed to the name ZAPPOS. The word "zappos" originated from the Spanish word for shoe "zapotos".

The year 2008 and 2009 was a time when companies were going bankrupt and doing tons of down sizing due to the recession. Being in the center of our countries economic crisis was a concern for the business owners at this point. At this time the three business partners decided that they needed to cut down on expenses and focus on building more profits for their company to survive. This was right after they decided to add on clothing, assesscories, and home goods to their offered merchandise at the end of 2007 to strengthen their brand. Unfortunately this wasn't enough to keep them safe during the recession. They were forced to let go of 8 percent of their staff members. Tony Hseih released a statement to the press in November 2008 about their decision, releasing a copy of the email sent out to his staff members about the very difficult lay off. The letter stated that not only every department of the company be affected, but they were going to close down several outlet stores in Neveda and Kentucky. The letter was wriiten by Tony himself and it also stated that it was the hardest decision that he had to make. Seeing their remoursefulness to let their employees go, they paid them for the rest of the year remaining. More was offered to employees that had been with the company for more than 3 years. Health and all other benefits were also still provided to them for the next 6 months after their layoff. In the letter Tony Hsieh stated that they were trying to be more proactive during the recession and be smarter with their money so that the company wouldn't crash, which was the purpose of the dreadful layoffs. (The inquistr, November 2008)

After the layoffs the business partners decided to allow Amazon to buy their company for 1.2 billion to stay afloat in these difficult times. ZAPPOS would still operate alone, but now under the Amazon company. This also was a benefit to Nick, Hsieh and Lin because ZAPPOS would receive $10 million in shares of Amazon.com and the employees of ZAPPOS would now receive $40 million in cash and restricted stocks for themselves. After the turmoil they decided to use their company culture and core values as a business model of success. To beat out the competition and to be a successful business that survives among the rest, they decided to use superb customer service as a profiting tool for their company. If people love and adore them, they are more reluctant to be loyal customers. According to Wikipedia, 75% of ZAPPOS customers are repeat buyers.

Not only does ZAPPOS take pride in their consumers but they also value and reward their employees tremendously. Zappos employees share perks like free health care, free lunches, and free vending machines. There is also an on campus car wash and dry cleaning facility that is offered to all employees. The atmosphere is laid back and employees are allowed to have fun while working amoungst decorated rooms with quickery themes.

Problem Statement: Preliminary Research Statement

ZAPPOS developed several core values that they see as a manual for their success and they use as a key business strategy. This company executives have this idea that customer service+ superb treatment of employees = a successful business. The list of values help to structure and standardize their organizational culture. They include

1. Deliver WOW Through Service

2. Embrace and Drive Change

3. Create Fun and A Little Weirdness

4. Be Adventurous, Creative, and Open-Minded

5. Pursue Growth and Learning

6. Build Open and Honest Relationships With Communication

7. Build a Positive Team and Family Spirit

8. Do More With Less

9. Be Passionate and Determined

10. Be Humble

These values exceed the top ten rules of an High Performace Organizations in chapter one of our text book Organizational Behavior by Schermerhorn , Hunt, Osborn, and Uhl-Bien.