Zappos and the Art of Profit Making

Discussion
Sep 14, 2010
George Anderson

By George Anderson

“Can life really be that great at work?” If you
work at Zappos then the answer is apparently “yes.” Now, if you manage
another business and want the fun and rewards that come with the Zappos culture,
you can get that too with Zappos Insights.

Tony Hsieh, CEO of Zappos, is spreading
the company’s philosophy through tours, meetings and one or two-day training
sessions. The goal is to help others adapt the Zappos approach to their own
businesses.

Dave Brautigan, owner of Atlanta Refrigeration, an appliance repair
company, took part in a two-day boot camp. Now his company replaces the worn-out
work boots ($200) of employees as well as their tools (up to $3,000). He claims
the lessons he took from Zappos Insights have boosted his company’s morale
and, oh yes, its top and bottom lines.

“Tony has no idea what refrigeration is, but he can take the knowledge
he has and put in a methodology for me to understand,” Mr. Brautigan told MarketWatch. “I’ve
been to a lot of [training] things. Zappos is just real.”

Companies and
individuals can join Zappos Insights for $39.95 a month online or pay up to
$4,000 for the two-day quarterly “boot camp.” The boot
camp includes meeting with top management at Zappos and dinner at Mr. Hsieh’s
house.

While Mr. Hsieh is looking to do good spreading the Zappos culture,
he also is looking for it to pad the company’s bottom line. The goal is for
Zappos Insights to eventually contribute upwards of 10 percent of the e-tailer’s
operating profits.

“There’s a potential for it to one day be a significant source of
revenue and profit for the company,” Mr. Hsieh said. “It’s still
in a start-up phase.”

Robert Richman, co-leader of Zappos Insights, told MarketWatch, “We
are the living lab here. Consultants tell you what to do, even though their
own business may be a mess. We are opening our doors and living and breathing
it every day. We open our doors and say ‘Be part of our family and talk to
anybody you want. And you see it’s the real deal.”‘

Discussion Questions: Can most other companies adapt the Zappos way to their
businesses? Should they?

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10 Comments on "Zappos and the Art of Profit Making"


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Max Goldberg
Guest
10 years 7 months ago

Treating employees well and empowering them to build the company are not new concepts. Zappos took those ideas and put them on steroids. The result has been a successfully growing business. It’s natural that other businesses would emulate Zappos’ success.

In the race to make budget cuts, all too often human capital is neglected. Companies do so at their own peril.

Bill Emerson
Guest
Bill Emerson
10 years 7 months ago

What a brilliant “win-win” idea.

At its simplest, Zappos’ approach is to empower an incredibly motivated organization to do whatever it takes to “delight” the customer so that they will come back. The success of this approach speaks for itself.

Can anyone who deals with the public benefit from learning details on how to do this? In the current market share battle, this is a truly rhetorical question. Customer service improves on a broader scale and Zappos adds a revenue stream.

Like I said, brilliant.

Ian Percy
Guest
10 years 7 months ago

We have technological breakthroughs almost by the minute and almost nothing in our world is standing still…that is except the human mind. The last thing to change in the retail environment will be how people think.

Fortunately we have stories like this one where someone (the leadership at Zappos in this case) recognizes that circumstances won’t change unless people think differently. The lesson is this: “It’s the CULTURE stupid!” “Culture” is a cumulative term referring to how people think about their lives, their purpose, each other, their customers, etc. It’s always been about the culture.

Now here’s the trap. Driven by outdated mechanistic thinking companies will rush to ‘do what Zappos does’. Yet another “Best Practice”–just what we need. Companies that mindlessly try to imitate Zappos won’t succeed. When the mind is missing from the method, the method won’t matter.

W. Frank Dell II
Guest
10 years 7 months ago

Company culture is an important element that too many companies ignore. Done right, it reduces turnover, increases productivity, and minimizes the need for outside hires. The problem is, we have seen many alternatives over the years and one size does not fit all. You simply cannot play around with hazardous materials, high voltage electricity, and open furnaces. Playing games while customers wait will never work well.

One needs a balance to be successful. Looking through the eyes of associates and identifying what will make a difference for them never goes out of style.

Gene Hoffman
Guest
Gene Hoffman
10 years 7 months ago

Any time an employer does things that make associates feel better about themselves, increasing their self esteem, it strengthens the bond between the company and employee. That suggests that productivity will increase in proportion to one’s happy feelings about one’s company. Thus Zappos’ Insights have transferability.

Lisa Bradner
Guest
Lisa Bradner
10 years 7 months ago

Ian and the other commentators here have already hit a number of the key points: culture is the essence of everything you do every day and has to be lived in every way. Few organizations have the guts to take on deeply held cultural norms. If Zappos can give them a few pointers that take some of the pressure off stressful times, it’s a help but true cultural change means embracing it in hard times and changing one’s own behavior. I’m not sure a boot camp alone can bring institutional change.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
10 years 7 months ago

A big contributor to Zappos success is their corporate culture. That is not to say that the Zappos culture is a fit for every business. What it does say is how important it is to create a corporate culture that fits your industry, clients and most importantly your employees.

A mission statement and vision on the wall are important, but how do you go beyond that? What is going to attract employees and keep them motivated on a daily basis? Is executive management really on board and are they living the corporate culture or expecting HR to create a manual for others to live by?

What Zappos is doing sounds easy, but in reality, it is one of the toughest things to get right. That said, if done correctly the rewards can be huge. Just ask Tony Hsieh.

Gene Detroyer
Guest
10 years 7 months ago

Bravo for Zappos! They are making hay on both sides of their business.

Unfortunately, this is a matter of fad and fashion. It is currently the latest and greatest and everybody wants to copy it to “make their businesses better.” But, history tells us that all the seminars in the world can’t change the basic philosophy and culture of businesses.

If the highest level executives in a company don’t truly buy in the education is worthless. If they do buy in, chances are they will forget about these ground breaking ideas as soon as the next quarter’s financials are due.

The Zappos philosophy is the antitheses of the DNA of American business.

Charles Wankel
Guest
Charles Wankel
10 years 7 months ago
Zappos’ program and approach has a combination of things rather than being just one thing. That is why it makes sense for people to go to a two-day seminar on it. My visit to Zappos headquarters found many techniques they deployed were working well and transferable. Some of them reflected Peters & Waterman suggestions of decades past like having celebrations of success. The equality fostered among people was a great morale builder seemingly. That is, no matter what your role is, you can readily find and chat up anyone else it seemed. The top managers had desks that were part of the overall open offices set-up. I was surprised that a C-level officer came down to greet me and usher me up the second floor rather than a staff person. It sort of reminded me of the friendliness of the Munchkins to Dorothy upon her arrival in Munchkin land. The facade of cheeriness is coupled with a situation where management is working hard to improve the bottom line and everyone is focused on getting sales… Read more »
George Anderson
Guest
George Anderson
10 years 7 months ago

Earn the loyalty of your employees and they will deliver the type of service that earns the loyalty of customers. Pretty much common sense, but rarely practiced in retail. I have often wondered why chains seem so unwilling to make the lives of their employees better. Today, we have companies donating millions upon millions to charities when they have full-timers who are paid so little they qualify for government assistance programs. Something is wrong with that logic.

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