Meet the new retail, same as the old retail

I had a board of directors meeting last night for KIPP Bayview Academy, which for me is a fun board because it’s smaller than most and has a nice social element to it (everyone is around the same age, no egos, nice people). In one of the crosstalk conversations a comment was made about and all of the women in the room immediately started talking about how great this site is.

What was interesting to observe was that they didn’t talk about any of the features of the site, and selection was only briefly commented on; what really made this a great service was the customer service and the community that they have built around it, the “buyer’s favorites” is an good example of this.

This reminded me that many technology-enabled companies forget that they are ultimately in the customer service business and if they don’t get that right then everything else is academic and suboptimized.

BTW, I asked a random selection of women in my office today if they had heard of this site… not only did every one of them know it, they were all customers. I may look out-of-the-loop for not knowing this site, but we never invested in specialty retail and I’m not a frequent shoe shopper so you’ll have to give me a little lattitude.

PS- a quick search shows that Matt wrote about this a couple of weeks ago.

PPS- and while I’m on Matt’s post, Sand Hill Slave is a great blog on the venture business.

1 thought on Meet the new retail, same as the old retail

  1. A letter from Zappos – amazing attitude

    Dear Customer,

    A few weeks ago, we sent out an email to our investors, employees,
    vendors, and business partners, giving them an update on Zappos
    and what we’ve been up to over the past 12 months.

    We had a few people suggest that we send out a company update to
    our customers as well, since many of our customers might be
    interested in what’s been going on behind the scenes at Zappos.

    If you are not interested in the company update and would just
    like to start shopping for shoes and handbags, you can ignore the
    rest of this email and visit our web site by clicking on the link

    AOL Users Click Here:

    Otherwise, please read on!

    It’s been a fun and exciting ride trying to keep up with our
    growth while still maintaining our fanatical focus on providing
    the very best customer service and the very best online shopping

    I still remember when people thought we were crazy for treating
    our customers so well by offering things such as free shipping,
    free return shipping, a 365-day return policy, and 24/7 customer
    service. A lot of people couldn’t understand why we would put our
    toll-free customer service number in the top left corner of every
    page of our web site, instead of hiding it like most other web
    sites do. And a lot of people couldn’t understand why we keep
    trying to improve our warehouse operations to get the shoes out to
    our customers as quickly as possible.

    Well, it’s because we think our company will either live or die by
    the service that we offer, and our goal is to be the absolute best
    service company in the world, and to build the best
    service-oriented company culture in the world.

    Last year was one of our most exciting years ever. Some
    highlights from the past 12 months include:

    – We grew our customer base to a total of over 3 million paying
    customers, meaning that approximately 1% of the US population
    has bought from us.

    – We outgrew our first Las Vegas office (30,000 square feet) and
    have now moved into a new location 10 minutes away (65,000
    square feet).

    – We broke ground and have completed construction on most of our
    new warehouse, which will add an additional 625,000 square feet
    on top of the 280,000 square feet of our current warehouse.

    – We grew our total workforce from 500 to 700 people
    (approximately half are in Las Vegas and half in Kentucky).

    – We increased the number of brands offered on our web site to
    over 600, and the number of unique styles to about 90,000.
    While we added many great partners this year, one of the most
    requested brands from our customers joined our family in 2005,
    with the addition of the Nine West Group. Having the brands
    that our customers are looking for makes it a better experience
    for everyone.

    – We implemented a new training program so that all new hires in
    our Las Vegas office must first go through 4 weeks of Customer
    Loyalty training (answering phone calls from customers) and 1
    week of training in our fulfillment center, regardless of what
    department they were actually hired for. We believe that by
    doing so, it forces all of our employees in Las Vegas to truly
    understand and appreciate the value of providing great customer

    – We were ranked in Inc. Magazine’s annual list of the 500
    fastest-growing private companies in the United States for the
    second year in a row (we came in at #23 for 2005).

    – We were selected as E-Tailer of the Year by Footwear News.

    – Our production team processed its one millionth image for
    display on our web site.

    – Our package volume with UPS increased such that approximately 1
    out of every 900 packages delivered worldwide by UPS was a
    Zappos package.

    – Our revenue from repeat customers has increased such that on any
    given day, over 60% of our sales are from repeat customers.

    – We continued our strategy of running the business at close to
    break-even in order to maximize our growth, which we have been
    doing for the last several years.

    Although many challenges still lie ahead, we hope to continue
    growing quickly in 2006.

    Over the past 6 years, our growth has been primarily driven by
    repeat customers and word of mouth. We will continue to build our
    brand and our culture around providing the very best service,
    because we believe that our most effective marketing comes from
    our customers.

    In terms of paid advertising, we’ve been happy with the results of
    our print advertising, and will continue to invest more in that
    area. We will also start experimenting with some TV and radio

    Later this year, we will be expanding our fulfillment operations
    into our new 625,000 square foot warehouse, which is located right
    across the street from our current warehouse. This should give us
    plenty of room to grow for the next several years.

    While we have plenty of room in our warehouse to grow, I think our
    biggest challenge will be continuing to build our service brand
    and protect our service-oriented culture.

    Our internal saying still holds true:

    “We are a service company that happens to sell shoes.”
    (And now handbags.)

    We believe that if we can build the Zappos brand into something
    that our customers associate with the absolute best service, then
    eventually we can sell other product categories as well.

    Our internal WOW philosophy is simple: We want every interaction
    with every customer to result in the customer saying “WOW — that
    was the best experience I ever had.”

    But our WOW philosophy extends beyond just our customers. It’s
    also the philosophy that we use to guide how we treat our
    employees, our vendors, and our other business partners. We
    believe that doing so is the only way to build an enduring brand
    and long-lasting company.

    This company has been built by our partners, in every sense of the
    word. Our customers, employees, vendors, business partners, and
    investors are all partners in building the Zappos business. We
    would not exist today if any of these groups were missing. So to
    all of our partners: thank you for your support and partnership in
    2005. We look forward to accomplishing even greater things
    together in 2006!

    Click here to visit now:

    AOL Users Click Here:

    This is the first time we’ve sent a company update to our
    customers, and we are trying to decide if we should continue to
    send out a company update every 6-12 months. If you really
    enjoyed or really disliked reading this company update, please let
    us know!

    PS: If you live near Las Vegas or Louisville, be sure to check out
    our jobs page at:

    Thanks for taking the time to read this update!

    Tony Hsieh
    CEO –

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