Question

Zappos Case Study

Zappos is an American-based online shoe retailer founded in 1999 by Nick Swinmurn. Nick Swinmurn was joined in the company’s management by entrepreneur Tony Hsieh who bought part of Zappos’ stock and later became its CEO in 2000 (Ferrell and Fraedrich 460). Zappos is based on an unconventional corporate culture of maximizing its stakeholders’ happiness. Ranging from its employees to customers, Zappos focuses on ensuring their satisfaction through integrity and astute business practices. Zappos has a strong ethical and social responsibility policy that forms not only the framework of the company’s operations but also its business values and corporate model. The operations of Zappos are based on the company’s ten core values that include: delivering WOW through service, creating fun and a little weirdness, and doing more with less among others (Ferrell and Fraedrich 461). Zappos’ core values have shaped the company’s customer-focused business model that is centered on establishing long-term customer relationships.

The unconventional business approach adopted by Zappos has enabled the company to be highly profitable and successfully tackle contemporary corporate ethical issues. Relying on its customer-first approach, Zappos informs its customers of any ethical issue or challenge affecting the company’s operations. For example, after the hacking of its computer system in 2012, the company emailed all of its customers to inform them of the sad news. This has strengthened the company’s relationship with its customers, which in return has resulted in high sales and revenue income for Zappos (Toelken 67). The hallmark of Zappos operation came in 2009 when the company was purchased by global retail giants, Amazon, in an unconventional deal that left Zappos’ operations intact.

Zappos’ corporate model is based on maximizing the happiness of stakeholders. The company’s operations are based on Zappos’ ten core values that emphasize happiness and integrity in all of its operations and relations. Zappos provides its customers with exceptional shopping and shipping experiences backed up by astute customer services. The company has designed its online retail sites in a user-friendly manner that enables its customers to easily shop and search for their preferred shoes. The user-friendly shopping experience of Zappos is compounded by a free shipping service that delivers Zappos’ products directly to the customers. Zappos also has a functional one-year satisfaction guaranteed return policy. The policy enables unsatisfied Zappos customers to return their purchased products for a full refund. The company’s operations are all based on the value of transparency and this enables Zappos to maximize the satisfaction of its employees, investors, the government, and even the general public. Zappos’ operations are based on open and truthful communication with not only its employees but also all of its stakeholders. The company provides its employees with detailed information about Zappos’ performance and is encouraged to share information about the company.

Zappos’ focus on maximizing its stakeholder’s happiness has impacted the company’s ethical culture in several ways. The company’s ten core values together with its focus on transparency have integrated the concept of integrity as an important aspect of Zappos’ corporate ethical culture. They are:

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 Positive Team and Family Spirit

8. Do More with Less

9. Be Passionate and Determined

10. Be Humble

The ethical culture of integrity is manifested in the actions of Zappos’ top management and its employees’ operations. Zappos’ focus on stakeholders’ happiness has also enabled the company to develop and expand its corporate social responsibility (CSR). Through a wide range of CSR programs such as philanthropy and environmental sustainability initiatives Zappos has expanded its ethical culture to give back to not only its employees but also to the American people.

Zappos has a call center specifically dedicated to answering its customer’s questions. The employees handling customers‘ queries at the call center are trained by Zappos particularly on how to create not only good rapport but also long-lasting friendship and relationships with the company’s clients. Zappos’ customer service is further strengthened by the numerous incentives the company offers to its customers such as free shipping and a 100 percent satisfaction guaranteed return policy. Moreover, Zappos has a unique user-friendly online shopping website that utilizes automatic inventory management systems to reduce customers’ frustrations while shopping by only listing products available in the company’s warehouses. The numerous unique customer service policies practiced by Zappos give the company a competitive advantage over its competitors.

Zappos has a distinctive and unique long-term relationship with its employees; a factor that has made the company quite successful in the online shoe retail business. The company has invested in a unique and effective hiring and training program for its employees. Zappos focuses on hiring the right individuals who are aligned with the company’s ten core values and its main theme of maximizing happiness. The company engages its recruited employees in an intensive five-week training program that includes a two-week customer service program. To ensure it remains only with interested and long-term employees, Zappos offers each recruit $ 2,000 to quit immediately after training. After the completion of the five-week training program, the company engages its employees in a development program that takes 200 hours of basic training on business concepts. The massive investment of Zappos in its employees gives the company a competitive advantage in the field of online shoe retail.

Utilizing its policy of maximizing stakeholders’ happiness and satisfaction, Zappos has to a large extent effectively managed the ethical risks it has faced in its operations. Zappos has encountered several ethical issues such as its 2012 data breach and controversial 2011 More than Shoes Cam. Zappos effectively handled the ethical issues by first informing its stakeholders of the unfortunate occurrences, apologizing, and coming up with relevant solutions to prevent the re-occurrence of the issues in the future. For example, Zappos quickly pulled down the More than Shoes Campaign, which was seen as sexual in nature. The company apologized and explained the production process to its stakeholders. The company’s transparent nature of operations has enabled the company to deal with any of its ethical issues successfully without losing much competitive ground to its competitors.

Zappos still faces numerous potential ethical risks in the future. For example, the current COVID-19 pandemic has severely affected the company’s operations and profitability. The economic impact of the COVID-19 pandemic will ultimately result in the company laying off a number of its workers.