GS65-PDF-ENG - CASE GS-65 DATE(REVISED ZAPPOS.COM DEVELOPING A SUPPLY CHAIN TO DELIVER WOW Our decision was always to focus on service because we

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GS-65 DATE: 02/13/09 (REVISED 01/03/11) David Hoyt prepared this case under the supervision of Michael Marks, Lecturer in Operations, Information, and Technology, and Professor Hau Lee as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 2011 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or request permission to reproduce materials, e-mail the Case Writing Office at: [email protected] or write: Case Writing Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University, Stanford, CA 94305-5015. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means –– electronic, mechanical, photocopying, recording, or otherwise –– without the permission of the Stanford Graduate School of Business. Z APPOS . COM : D EVELOPING A S UPPLY C HAIN TO D ELIVER WOW! Our decision was always to focus on service because we got instant feedback whenever we upgraded delivery. Customers were wowed by the experience, and then they told a bunch of people. And word of mouth works a lot faster on the Internet than it does person-to-person because you can just e-mail out a bunch of your friends and say, 'hey I just had this amazing experience.' That was one of the reasons that we wanted to keep upgrading shipping. —Alfred Lin, Chairman, COO, and CFO of Zappos 1 In late 2008, less than 10 years after its founding, Zappos anticipated reaching annual gross sales of $1 billion. When its founder first proposed the idea of selling shoes online, the concept was greeted with intense skepticism. Despite the challenges, the company had achieved dramatic success. It was the world’s largest online retailer of shoes, was profitable, growing rapidly, and had an outstanding reputation for customer service. Its employees were passionately, engaged in their work. While shoes still provided the vast majority of revenues, Zappos had expanded its product offerings based on feedback from customers and the enthusiasm of employees. There was still a huge untapped customer base—only 3 percent of the U.S. population were Zappos customers—suggesting that the company was not close to saturating its opportunities in the U.S., let alone other international regions. However, the collapse of the financial markets, and the prospect of a prolonged recession, created new challenges. Zappos had never been lavishly funded—it had always been intensely conscious of cash. Unlike most retailers, it was continuing to grow, but early signs were that the rate of growth was slowing. As the company’s leadership looked forward, it considered ways that Zappos could sustain the high quality experience that it was known for—to deliver “wow” to its customers, suppliers, and other affiliates. The company’s supply chain management had evolved as Zappos had grown, and was one of its sources of excellence. Yet, perhaps there were
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This note was uploaded on 05/08/2011 for the course IEOR 153 taught by Professor Staff during the Spring '08 term at University of California, Berkeley.

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GS65-PDF-ENG - CASE GS-65 DATE(REVISED ZAPPOS.COM DEVELOPING A SUPPLY CHAIN TO DELIVER WOW Our decision was always to focus on service because we

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