Succcessful eCommerce case: the history of Zappos

21/02/2018
  • Zappos is synonym of the best customer service in the world. Do you want to know the history of Zappos? We share the keys of its success with you.

  • Surely you have heard many urban legends about Zappos. Yes, they are the eCommerce identified as the one with the best customer service in the world.
     
    And it is that the objective of this business, which began as a shoe shop, has always been to provide a 'wow' experience to the user. Without exception, without conditions, without any crack.
     
    There are a few lessons to learn in Zappos history. First, you don not lways have to follow the marked path. Zappos went against the flow during its early years, in an apparently risky manner but which finally gave results. 

    And little by little, in a long and constant way, it was carving its own reputation that responded to a strategy planned and and executed in detailed by its CEO, Tony Hsieh. Until becoming what has come to your ears: plainly and simply the online store with the best customer service in the world

    Today, we are going to tell you Zappos history, a history to take notes if you work selling online. Let´s discover the keys to its success
  • The history of Zappos

  • As mentioned above, Zappos started as an online shop of shoes in the prehistory of the eCommerce, back in 1999. Its founder, Tony Hsieh, invested $500,000 from his own pocket to launch the project. However, he did not get any business angel or investment fund interested in it. 
  • Between 2000 and 2002, the company ran out of money 2 times. Tony Hsieh was who, again, invested in his own company as he did not find external funding. But, the context was extremely hostile then: the dot-com bubble was about to explode. 

    However, despite the confusion and risks, Zappos managed to have a turnover of no less than $ 32 million at the end of that year. Still, it was not a profitable business, but having a considerable turnover volume convinced Hsieh to persevere in his adventure. 

    From the beginning, Hsieh was well aware of the importance of customer service in the success of his project. And years of work had made him realize that his was not a technology company, but a business focused on the client and their experience

    For this reason, he decided one unusual thing at that ime. He left Silicon Valley and moved to Las Vegas, conscious that there he would find the best professionals of call center in the country

    At the end of 2004, Zappos got to have a turnover of $ 184 million. And he finally caught the attention of Sequoia, one of the big venture capital investment funds in United States, which invested 20 million dollars in the company. Zappos luck was about to change. 
  • In 2005, the company doubled its turnover and Jeff Bezos, CEO of Amazon, wanted to buy it. But Hsieh turned down the offer, claiming that he did not want his brand and everything what he had achieved with it (its corporate culture, its reputation, its approach to customer) got lost in the immense Amazon business structure

    At the end of 2005, Zappos finally reached break even, in other words, for the first time in its history it produced profit. It had been 6 years since its beginning and the best was to come. 

    In 2009 Bezos curried favor with Hsieh again, this time offering 1,200 million dollars. And Hsieh finally agreed, but with one condition: that Zappos would continue operating as an independent brand, with its culture, not being absorbed by the Amazon brand facing the customer. 
  • INSIGHTS: perseverance and vision of its founder were key in the evolution of Zappos. If its CEO had doubted that the company would have its momentum, surely he had thrown the towel much before. Also he would have done so if his vision had been less clear. Because Hsieh knew how his company was going to be when it grows. And thanks to this, he achieved so.

    On the other hand, the customer focus was present at the business culture of Zappos from the beginning. At that time was brave considering an eCommerce not as a technology company – all did: Internet = technology - but as a services company, where the maximum value was not put it by software or code, but the quality of the relationship with the user and buyer.
  • The best customer service in the world

  • Saying Zappos has the best customer service in the world is not being very specific. So, the best thing is to go into detail and see what Zappos does but the rest of online stores don´t.

    To start with, Zappos never charge shipping, purchase or return costs. 

    As you know, shipping charges tend to be one of great brakes when buying online, and for this reason many companies today absorb them in the price or eliminate them directly. But, it is not so common to find online stores that do not charge for return. In this sense, Zappos is still quite unique. 

    The fact of not having to pay shipping gives rise to people make purchases online, try shoes on at home and return without any problem, those that do not please him. This brings online shopping closer to the experience in physical store, eliminating, at a stroke of a pen, several important brakes.
  • In addition, where there is a return, not maybe easier to do.The client can download special tags for online store return and manage the process easily and free of charge. And if it was not enough, customers have an amazing whole year (365 days) to think twice and return the product. 

    But apart from these specific facts, what truly makes a difference is the commitment of Zappos customer service

    The staff throw themselves into solving incidents, make suggestions and serve customers online as if they were shop assistants, providing the user the feeling of proximity and customized treatment normally found only to physical stores.
  • INSIGHT: This strategy aims to promote loyalty among customers from the very purchase process and convert them in to brand´s prescribers. Hsieh himself argues that his idea is to invest entire budget that normally would go to acquisition and marketing to improve the user experience, both on the website and in the relationship with the brand, with the intention that customers themselves are who acquire new customers by word of mouth.
  • This is the history of Zappos, the eCommerce withthe best customer service in the world. What is your opinion? Did you know about it? No doubt his founder and CEO made some polemical decisions during its evolution, do you agree? Would you have dared to? Let us know in the comments.

  • Images | By clicking each image you can access its source.
    Head photo | Zappos.

Laia Ordoñez


Laia Ordóñez is an expert in Content Marketing applied to eCommerce. She is the founder of Karyukai, where she creates, edits and supervises content for clients such as Acumbamail, DueHome, Kartox or Textura among many others. She is editor-in-chief and editor of the Oleoshop blog.

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