Zappos Case Study Zappos wwwzapposcom is a Las Vegasbased o

Zappos Case Study Zappos (www.zappos.com) is a Las Vegas-based o OW through service,\" which is onious if you\'ve ever or retailer that has been eited in Fortune\'s list of the Best eappos. It proikdes free shipping in both diee- Companies to Work For and Fast Company\'s list ote ons on all parchases. It often gives customers surprise world\'s most innovative companies. In fact, its remarkupgrade for faster shipping, And it has a 365-day return ble success resulted in Zappos being boaght by Apolicy. In 2003, Zappos made a decision about customer for $850 million in 2009. Zappos was founded in San service: it vews any expense that enhances the customer Francisco in 1909 and moved to Las Vegas for theceap experience as a marketing cost because it generates more repeat customers through word of moutlh. CEO Tony Hsich never outsourced his call center because he considers the fanction too important to he sent to Inia. Job one for these frontliners s to delight ca Unlike most inbound telemarket ers, they don\'t work from a seript. They\'re trained to encourage callers to order more than one sie or color, because shipping is free in both directions, real estate and abundant call center workers. The company sells a large va- riety of shoes from nearl every major manufacturer and has espanded its offer- ings to handbags, apparel, electronics Despite the crippling economke down- urn, sales jumped almost 20 pereent in 200S, pass- ing the $1 billion mark two years ahead of schedale POWERED SERV The companys first Zappos provides free shipping in both directions on al core value is \"Deliver puchases CHAPTER 1: Goods, Services, and Operations Management 21

Solution

1. Draw and describe the customer benefit t package that Zappos provides. Identify and describe one primary value creation, one support, and one general management Process you might encounter at Zippos.

ANS : The customer benefit package Zappos provided to their customers is the” Deliver Wow through Service” for customers who ever order from Zappos , and they also provide free shipping in both directions for all their purchases and they often give customers free upgrade surprise and 360 return day policy.

2. Explain the role of service encounters and service management skills at Zappos. How does Zappos create superior customer experiences?

ANS : The way Zappos create superior customer experiences is by making sure that their customers are all happy with their order including those customers that have brought the products pass the return date by providing them 365days policy, and also trained their works to be more implored to use their imaginations customers that they feels has a tough day should be send an overnight flower to her door step the next morning

3. Describe how any three of the OM activities in the box “What Do OperaTons Managers Do?” impact the management of both the goods that Zappos sells and the services that it Provides.

ANS : Operation Management is the science and art of ensuring that goods and services

OM Inventory management: Zappos it was with fulfilment out of their hands, they were faced with problems of control over service quality and began to hold inventory while suppliers became more comfortable with the idea of online retail. They continued to adapt this internal fulfilment model. By 2003, all shipments were made from their own inventory.

Additionally, their inventory management system has developed into an extremely automated process, allowing them to more easily scale the company up to the size it is today (showing 2,851,610products available For shipment on November 25, 2008).

As online retail has matured, it has become clear that Zappos has superior quality and efficiency in the industry and many companies have begun to use Zappos as a primary method of fulfilling online retailorders.

OM Quality: Customer services are what make Zappos special. Call centre employees don’t use scripts and aren’t pressed to keep calls short. Shipping and return are Free. Zappos also has a very liberal return policy. It will take returns for up to 365 days without asking questions. If Zappos warehouse is out of a pair of shoes a customer wants, Zappos will e-mail the customer links to the other website where the shoes are for sales. It also has the fastest site on the Web

OM Management: Zappos has an informal structure organizational structure. The structure follows a different method. The informal structure identifies key positions of management within the organization. Zappos has developed an organizational culture that creates a positive, fun working environment. Strong cultures lie Zappos emphasize teamwork, allow risk taking, encourage innovation and make the people of the team top priority.

4. Explain how this case illustrates each of the seven major differences between good-s producing and service providing businesses.

ANS : Differences Between Goods and Services

1. Goods are tangible while services are intangible. (Does Zappo’s manufacture shoes? No. The CEO says “Deliver WOW through service.” And “They may only call once in their life, but that is our chance to wow them.” Zappo’s has a dual CBP with goods and services of roughly equal importance. That is, what does the customer buy? A bundle of goods and services.)

2. Customers participate in many service processes, activities, and transactions. (order entry, returns, calls to the call center—all create more uncertainty in delivery process).

3. The demand for services is more difficult to predict than the demand for goods. (customers can order via the web or call in at 3 am in the morning; time zones, convenience creates value, etc.)

4. Services cannot be stored as physical inventory (web and server capacity, call center staff and equipment capacity; capacity is the substitute for physical inventory in a service business).

5. Service management skills are paramount to a successful service encounter (face-to-face call center staff (humans) and the customer (humans); go over the three dimensions of service management; customer to Web page and software is also a set of service encounters but human to 100% technology interface so in some ways service management skills exists in the technology).

6. Service facilities typically need to be in close proximity to the customer (with Zappo’s virtual store the world is its market; no bricks and mortar here except at warehouses that have to supply the stores).

7. Patents do not protect services (no protection from a competitor setting up a similar virtual store for global markets; can also copy the return process system, order picking system, etc).