Zappos-company.docx

ZAPPOS COMPANY

Submitted by:

Briones, Mikka Joy A. Burgos, Hana Rymple B.

Background Zappos was founded in 1999 by Nick Swinmurn, who says that his initial inspiration came when he failed to find a pair of brown Airwaks at his local mall. That same year, Swinmurn approached Tony Hseih and Alfred Lin with the idea of selling shoes online. Hsieh was initially skeptical, and almost deleted Swinmurn’s voice mail. After Swinmurn mentioned that “footwear in the U.S is a 40 billion dollar market and 5 % of that is already being sold by paper mail order catalogs,” Hsieh and Lin decided to invest $2 million through their investment from Venture Frogs. The company was officially launched online in 1999 as “ShoeSite.com.” In July 1999, the company’s name was changed from Shoesite to Zappos after “zappatos,” the Spanish word meaning “shoes.” In 2000, Venture Frogs invested capital into the business and allowed Zappos to move into their office space. In 2001, Hsieh came on board as Co-CEO with Nick Swinmurn.

Growth From 1999 to 2000, Zappos earned $1.6 million in gross sales. In 2001 Zappos brought in $8.6 million, a significant increase from previous year. Inn 2004, Zappos did $184 million in gross sales and received a $35 million investment form Sequoia Capital. That same year, they moved their headquarters from San Francisco to Henderson, Nevada. Over the next three years, Zappos doubled their annual revenues, hitting $840 million in gross sales. By 2007, the company expanded to include handbags, eyewear, clothing, watches, and kids’ merchandise. In 2008, Zappos hit $1 billion in annual slaes.

One year later, they debuted at No. 23 on Fortune’s Top 100 Companies to Work For. In the early 2000s Zappos made the decision to move away from its original business model wherein the company does not manage any inventory. Hsieh noted, “Even though it was hard to walk away from sales at a time when nobody is offering you money, we couldn’t distinguish ourselves in the eyes of our customers if weren’t going to control the entire experience. We had to give up the easy money, manage the inventory, and take the risk.”

Amazon Subsidiary In 2009, Zappos announced an acquisition by Amazon. Within Zappos’ board of directors, two of the five- Hsieh and Alfred Lin- were primarily concerned with maintaining Zappos company culture, wheras the other three wanted to maximize profits in a down economy. Initially, Hsieh and Lin planned to buy out their board of directors, which they estimated would cost $200 million. In the midst of this, Amazon executives approached Zappos with the proposition of buying the company outright. After an hour-long meeting with Amazon CEO Jeff Bezos, Hsieh sensed that Amazon would be open to letting Zappos continue to operate as an independent entity, and started negotiations. On July 22, 2009, Amazon announced that it would buy Zappos for $940 million in a stick and cash deal. Owners of Zappos were set to

receive approximately

10 million Amazon.com shares, and employees would receive a separate $40 million in cash and restricted stock units. The deal was eventually closed in November 2009 foor a reported $1.2 billion. On June 22, 2012, Zappos announced it would be handling operations of its Kentucky warehouse to Amazon on September 1, 2012. The outlet housed in the Kentucky warehouse remains open, but the name was changed to 6 pm outlet.

2012 hacking incident

On January 16, 2012, Zappos announced that its computer system was hacked, comprising the personal information of 24 million customers. In response, the company required all of its customers to change their passwords on the site, though it noted that it was highly unlikely that password information was obtained due to encryption. This incident led to a class action suit In Re Zappos.com,Inc, Customer Data Security Breach Litigation, with plaintiffs claiming that Zappos did not adequately protect their personal information.

Products As of 2010, shoes accounted for about 80% of Zappos’ business. As of 2007, Zappos had expanded their inventory to include clothing, handbags and other accessories, which accounted for 20% of annual revenue. Zappos executives stated that they expected that clothing and accessories would bring in an additional $1 billion worth of revenue, as the clothing market four times the size of the footwear market. The company sells many different types of footwear, including vegan shoes. In 2004, they launched a second line of shoes called Zappos Couture.

Zappos Corporate and Social Responsibility Zappos employs a societal market orientation. The company involves everyone in its operations that include the sales, products promotion, and advertisement. Similarly, it has created a healthy relation between the workers in the company and also the society. People find it ideal to purchase shoes in the company’s stores and have developed loyalty because of the spirit the company has created. Zappos is trying to keep and maintain the existing customers through social participation that involves advertising (Zappos blog,n.d). The company seeks to ensure that the long-term interest of the society is achieved by strengthening its relation with charitable organizations. The company uses Zappos blog to practice corporate social responsibility in the following ways. The company has a culture that focuses on fulfilling the interest of its

employees, and its mission is to make the world conducive to everyone. The website has been used to engage with the customers and give them updates on the products and other news concerning the company. It has built an open and honest relationship with the customers and society in general. The employees are constantly present on the website and social media advertising products and presenting the good image of the company. Zappos operates at the level of philanthropic responsibility. The company engages in additional behaviors and activities that benefit the society. Precisely, Zappos support community projects and contribute a huge amount of its goods to charitable organizations (Zappos blog, n.d). Also, if the employees volunteer to support the community, the company pays them for the time they are out. Zappos operates at a post-conventional level of morality. The company is concerned with doing the best for its employees, customers and society regardless of what other people or competitors think.

Zappos For Good A long standing department dedicated to fostering Zappos’ community and charitable efforts. Having supported a variety of causes over the years, Zappos for Good’s primary mission is to spread happiness and celebrate the good in everyone while encouraging employees to be the good they want to see in the world. This bold mission is supported by series of new and ongoing programs and partnerships including GIVE, by Zappos For Good, Pawlidayz, Friends On Us Fridays and many more.

Zappos For Good focuses on a few major areas including:

1. Charitable Donations

 GIVE, by Zappos For Good, is a series of partnerships with charities who accept new and used goods to make the world a better place and help build our future heroes. The GIVE program makes donating easy; simply download a shipping label, drop off the donation at a UPS store and Zappos For Good will cover the cost of shipping Current partners include Sole4Souls, Kids In Need Foundation and Spread the World.

2. Animal Advocacy and Adoption  With countless dogs coming to work each day at the pet friendly Zappos campus, animal advocacy is near and dear to many in Zappos family.as such, Zappos has long supported animals in need and has helped thousands of four legged friends find safe and loving homes through their annual Home for the Pawlidayz campaign in which Zappos sponsors adoption fees at shelters across the country through the weekend of Black Friday. This campaign continues to grow each year, with the launch of Friends on Us Fridays, which took the offering of free adoptions form one weekend and expanded it to encompass 15 states and 36 cities nationwide every Friday from August 11 to November 24 with the hopes to increase Gross Domestic Happiness in the U.S. Exciting new developments will continue to be announced later this year.

3. Sustainability and Environmentalism  For the past two years Zappos has achieved carbon neutral status for all of their corporate flight and travel activities and has participated in beach clean-up days across the country. The Zappos For Good team will be implementing additional sustainable business practices at Zappos while acting as an advocate for environmental sustainability in the retail industry.

References:

https://www.prnewswire.com https://en.m.wikipedia.org https://www.essaytyping.com