Case Study: Zappos’s HR Practices

Unconventional Retailer

The story of Zappos, an unconventional retailer, is somewhat unusual. Before the company
came to the scene, buying shoes online looked like a crazy business proposition. The
company had its origins in 1999. Nick Swinmurn founded Zappos in 1999 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, the company started as middleman, transferring orders between
customers and suppliers but not holding any inventory (a “drop ship” strategy) The website
was soon renamed Zappos, after the Spanish word for shoes (zapatos) In 2000, Tony stepped
making nearly investor and became its CEO subsequently. Zappos struggled for its first few
years, making sales but not generating a profit. The dot-com crash forced Zappos to lay off
half its staff, but the company recovered. By the end of 2002, Zappos had sales of $32 million
but was still not profitable. In 2003, the company decided that 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. Zappos moved to Las Vegas in 2004 to take
advantage of a larger pool of experienced call center employees. The company generated its
first profit in 2007 after reaching $5840 million in annual sales Zappos also started to be
recognized for its unique work environment and approach to customer service. In 2010,
Amazon bought the company for $1.2 billion. Amazon agreed to let Zappos operate
indepently and to keep Hsich as CEO. After the merger, the company restructured into 10
separate companies organized under the Zappos Family.

Core Values & Business Model

Zappos has ten core values that guide every activity at the company and form the heart of the
company’s business model and culture: deliver WOW through service: embrace and drive
change, create fun and a little weirdness; be adventurous, creative and open minded; pursue
growth and learning, build open and honest relationships with communication: build a
positive team and family spirit; do more with less be passionate and determined and be
humble. Zappos core values differ from those of other companies in a couple of ways. In
addition to being untraditional, 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. The Zappos business model is built around developing long-term
customer relationships. Zappos does not compete on price because it believes that customers
will 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 s

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