Zappos.com: Developing a Supply Chain to Deliver WOW! SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Zappos.com: Developing a Supply Chain to Deliver WOW!
Zappos was founded in 1999, during the Internet boom, to sell shoes online. The company's founding premise was to provide the ultimate in selection to its customers-all brands, styles, sizes, and colors. Zappos organized all aspects of its business (including recruiting, culture, call center, inventory, website, and supply chain) to provide the best possible service-it wanted to "wow" everyone who interacted with the company, from customers to employees to corporate partners. Zappos grew rapidly, and by 2008 was profitable with net sales (after returns) of about $650 million. The company faced a number of issues as it looked forward. While it had penetrated only about 3 percent of the U.S. market for shoes, Zappos had expanded its product lines to items such as camping gear and video games. It needed to determine those elements of its strategy had contributed to its success in shoes, and whether it would be able to duplicate that success in other product lines. It also needed to determine how it could scale its business-much of the effort it had made to "wow" its customers was labor intensive and expensive-could this be scaled to a company with revenues of tens of billions? Finally, the economic landscape changed dramatically in late 2008, with the financial market collapse and recession. The service-intensive Zappos.com business was based on sales at little to no discount, unlike many websites that relied on selling at the lowest possible price. Would the company need to make changes to respond to the changed economic environment, and if so, what were those changes? The case provides an opportunity to evaluate the core competences of an Internet retailer that has experienced rapid, initial success. The case enables students to consider supply chain issues, which are critical to the company's success, in the broader context of the business: the bases of Zappos' success, its core competencies, culture, and competitive environment.
Swot Analysis of "Zappos.com: Developing a Supply Chain to Deliver WOW!" written by Michael Marks, Hau Lee, David W. Hoyt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zappos Wow facing as an external strategic factors. Some of the topics covered in Zappos.com: Developing a Supply Chain to Deliver WOW! case study are - Strategic Management Strategies, Manufacturing, Marketing, Organizational culture, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Zappos.com: Developing a Supply Chain to Deliver WOW! casestudy better are - – cloud computing is disrupting traditional business models, wage bills are increasing, increasing transportation and logistics costs, geopolitical disruptions, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies,
increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, etc
Introduction to SWOT Analysis of Zappos.com: Developing a Supply Chain to Deliver WOW!
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zappos.com: Developing a Supply Chain to Deliver WOW! case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zappos Wow, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zappos Wow operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Zappos.com: Developing a Supply Chain to Deliver WOW! can be done for the following purposes –
1. Strategic planning using facts provided in Zappos.com: Developing a Supply Chain to Deliver WOW! case study
2. Improving business portfolio management of Zappos Wow
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Zappos Wow
Strengths Zappos.com: Developing a Supply Chain to Deliver WOW! | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zappos Wow in Zappos.com: Developing a Supply Chain to Deliver WOW! Harvard Business Review case study are -
Learning organization
- Zappos Wow is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Zappos Wow is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Zappos.com: Developing a Supply Chain to Deliver WOW! Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Zappos Wow has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Zappos Wow to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Zappos Wow is one of the most innovative firm in sector. Manager in Zappos.com: Developing a Supply Chain to Deliver WOW! Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Zappos Wow has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Zappos Wow has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Effective Research and Development (R&D)
– Zappos Wow has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Zappos.com: Developing a Supply Chain to Deliver WOW! - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Zappos Wow is present in almost all the verticals within the industry. This has provided firm in Zappos.com: Developing a Supply Chain to Deliver WOW! case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Zappos Wow are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Leadership & Managing People industry
– Zappos.com: Developing a Supply Chain to Deliver WOW! firm has clearly differentiated products in the market place. This has enabled Zappos Wow to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Zappos Wow to invest into research and development (R&D) and innovation.
Analytics focus
– Zappos Wow is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Michael Marks, Hau Lee, David W. Hoyt can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Zappos Wow
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Zappos Wow does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Zappos Wow has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Zappos Wow in the sector have low bargaining power. Zappos.com: Developing a Supply Chain to Deliver WOW! has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Zappos Wow to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Zappos.com: Developing a Supply Chain to Deliver WOW! | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zappos.com: Developing a Supply Chain to Deliver WOW! are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Zappos Wow is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Zappos.com: Developing a Supply Chain to Deliver WOW! can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Zappos Wow is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Zappos Wow needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Zappos Wow to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Zappos.com: Developing a Supply Chain to Deliver WOW! HBR case study mentions - Zappos Wow takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Zappos Wow supply chain. Even after few cautionary changes mentioned in the HBR case study - Zappos.com: Developing a Supply Chain to Deliver WOW!, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Zappos Wow vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Zappos.com: Developing a Supply Chain to Deliver WOW!, in the dynamic environment Zappos Wow has struggled to respond to the nimble upstart competition. Zappos Wow has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Zappos.com: Developing a Supply Chain to Deliver WOW! that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Zappos.com: Developing a Supply Chain to Deliver WOW! can leverage the sales team experience to cultivate customer relationships as Zappos Wow is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zappos.com: Developing a Supply Chain to Deliver WOW!, is just above the industry average. Zappos Wow needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Zappos Wow needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Zappos Wow has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Lack of clear differentiation of Zappos Wow products
– To increase the profitability and margins on the products, Zappos Wow needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Zappos Wow has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities Zappos.com: Developing a Supply Chain to Deliver WOW! | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Zappos.com: Developing a Supply Chain to Deliver WOW! are -
Manufacturing automation
– Zappos Wow can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Zappos Wow can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Zappos Wow can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Leveraging digital technologies
– Zappos Wow can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Zappos Wow can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Zappos Wow has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Zappos.com: Developing a Supply Chain to Deliver WOW! - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Zappos Wow to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Zappos Wow has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Zappos Wow can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Better consumer reach
– The expansion of the 5G network will help Zappos Wow to increase its market reach. Zappos Wow will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Zappos Wow to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Zappos Wow to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Zappos Wow in the consumer business. Now Zappos Wow can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zappos Wow in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Zappos Wow can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Zappos.com: Developing a Supply Chain to Deliver WOW! External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zappos.com: Developing a Supply Chain to Deliver WOW! are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Zappos Wow will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Zappos Wow with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Zappos Wow in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Zappos Wow.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Zappos.com: Developing a Supply Chain to Deliver WOW!, Zappos Wow may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Environmental challenges
– Zappos Wow needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Zappos Wow can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Zappos Wow business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Zappos Wow can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Zappos.com: Developing a Supply Chain to Deliver WOW! .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Zappos Wow needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Zappos Wow is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Zappos Wow
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Zappos Wow.
Regulatory challenges
– Zappos Wow needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Stagnating economy with rate increase
– Zappos Wow can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Zappos.com: Developing a Supply Chain to Deliver WOW! Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Zappos.com: Developing a Supply Chain to Deliver WOW! needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Zappos.com: Developing a Supply Chain to Deliver WOW! is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Zappos.com: Developing a Supply Chain to Deliver WOW! is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Zappos.com: Developing a Supply Chain to Deliver WOW! is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Zappos Wow needs to make to build a sustainable competitive advantage.
