ZAPPOS.COM Harvard Case Solution & Analysis

ZAPPOS.COM Case Study Solution

Problem Statement

Since the establishment of Zappos – an online shoe and apparel shop, Zappos was the  largest leading online shoe store throughout the world,but the problem faced by Zappos was considered to be an inefficient inbound supply chain. This was due to the heavy optimization of the outbound supply chain in terms of improving customer service. However, the inbound supply chain has equal importance. There is a number of factors contributing to this problem, which include uneven scheduling that leads to the inefficient management of time, issues associated with traffic management and restricted visibility into the supply chain of the manufacturer.

An approximate of 3 percent of the total population of the United States comprised of the consumer base of Zappos. Although Zappos was recognized and appreciated for its high-quality experience i.e. WOW to affiliates, customers and suppliers. The number of repetition of the customers from the 2004 grown from 40 percent to 75 percent in the year 2008.  Addressing such issues tends to be a difficult task, but it is considered as an important measure to be taken in order to provide the organization with long-term benefit. Thus, the key issue related to the inbound supply chain is based on three main following aspects:

  • Uneven Inbound Deliveries.
  • Uncoordinated and Lengthy Supply Chain.
  • Less than truckload deliveries.

Firstly, uneven inbound deliveriescould be higher because of the heavy traffic issues, and in the case of lower uneven inbound deliveries, the staff and inventory management are left without any choice but to wait further.

Secondly, an uneven and lengthy supply chain requires different multiple stops along the way right before the final delivery of the products at the Zappos fulfilment Centre.

Lastly, considering the fact that the arrival of most of the current deliveries of the inventory shipments i.e. less than truckload tends to further aggravate the onsite issues of traffic. The prevalence of the first issues i.e. uneven inbound deliveries were based on the reason that Zappos had a wide-ranging network of suppliers with availability of not less than 1400 brands provided with a wide window of delivery for the shipments. Due to the limited visibility of supply chains with the suppliers and manufacturers, the placement of an order on the basis of the anticipated inventory of the supplier at the start of the month might arrive at any day of the month.

Such considerable viability source over the concern of inbound supply chain which was out of control right at the moment. The wide-ranging windows of the product delivery were thought to the fact that the maintenance of the good relationship of the suppliers regarding the delivery of the product was the requirement of Zappos. The organization believed that they should not question the supplier in order to bring change from the standard practice used by them that holds them in specified conditions. Additionally, the arrival of the shipment was only about five days a week from suppliers with the continuous operation of the outbound supply chain.

The inbound supply chain mainly includes the manufacturing of the shoes in China, which are then sent to theChinese port to China port. After the shoes get boarded, they are shipped to the Long Beach, California with an included distribution of the wide-ranging suppliers through the entire region of the United States of America. However, many of the supplier networks are located in Southern California. The shoes are  finally shipped to the Zappos fulfilment Centre, Kentucky after going through a long process of being on the way from manufacturing location to the final destination.

Unless each of the intermediary stops upheld some value, but the stops were considered to be inefficient and were known to incur the redundant cost. While the last issue that was needed to be addressed was about the arrival of the significant number of shipments as less-than-truckload. This not only results in the increased number of arrival of trucks at Zappos but led to the occurence of unnecessary issues related to traffic problems. Additionally, it was considered to be economically inefficient as the charging amount for the less-than-truckload was more per unit as compared to the truckload shipments.

 Supporting Analysis

SWOT Analysis

StrengthsWeaknesses
·         The passion of the Zappos to deliver amazing customer service.

·         Investment in the overnight shipping for most of the consumer base.

·         Training of new employees providing education about the organizational culture.

·         Genuine consideration about the customer care.

·         24 hours operations at warehouse for super-fast delivery service on orders.

·         Independent working of employees i.e. excluding any requirement of using scripts, or call time limits.

·         Wide-range of products and the addition of verticals such as running, outdoor activities and a RideShop.

·         Inventory statistics – 1417 brands, 152677 styles, 824,277 UPCs and a total of 2,851,610 products at one time.

·         Committed to providing the best customer experience by igniting the spirit for superior service.

·         Struggle in achieving the objective of the organization i.e. increased satisfaction of customer.

·         Increased amount of time in the delivery of goods due to inefficient management of inbound supply chain.

·         The increased amount of time between receiving a customer order and delivery of the goods.

·         Increasing inventory holding cost and shipping cost

·         Lack of efficient management of the warehouse operational performance.

·         Low wages as compared to other market players for the customer service representative position.

OpportunitiesThreats
·         Increase in the confidence of the customer with online shopping.

·         Massive and untapped growth of domestic market.

·         Advanced use of technological approach to provide more convenient approaches to customers.

·          Expansion and differentiation from other companies.

·         External partnership for effective management of the excess inventory operations.

·         Expansion of the consumer base in Canada.

·         Expansion of warehouses or the improvement in the methods of transportation.

·         Prevention in the manufacturing of counterfeit products due to significant increase in the online sales.

·         Possibility of the economic downfall due to recession might result in the decline of shoes sale.

·         Shipment delays might lead to the loss of potential customer base.

·         Increased competition in online shopping services.

·         Limited visibility into the supply chain of the manufacturer.

·         Few details regarding the delivery schedules might result in increased issues of supply chain.

·         The rapid shift of brick and mortar stores to online store services.

Competitive Analysis

The main purpose of performing the competitive analysis of Zappos is to evaluate the strategies of the company in order to determine the strengths and weaknesses relative to the company’s own products and services with its competitors. Also, competitive analysis is a critical part of the company’s marketing plan which helps to decide what to focus on and how to focus in order to increase the market share of the company as compared to the competitors............

 

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