Joseph Michelli book, The Zappos Experience: 5 Principles to Inspire, Engage, and WOW discussed the Zappos approach that Michelli breaks into five key elements:
- Serve a Perfect Fit—create bedrock company values
- Make it Effortlessly Swift—deliver a customer experience with ease
- Step into the Personal—connect with customers authentically
- S T R E T C H—grow people and products
- Play to Win—play hard, work harder
We discuss this in the related podcast and transcription that you can find at Principles to Inspire, Engage, and WOW. This excerpt talks about Zappos and their supply chain thinking.
Joe: What’s always interested me in a company like Zappos, they’re a niche outfit. I mean you’ve got to want to buy shoes online. Not a lot of us do but practically buying anything online is becoming more accepted right now. But should other online companies try to mimic Zappos? Or what should they be taking away from your book?
Joseph Michelli: Well, I think there is some mimicking to do. One of the biggest problems about online purchases is it’s a lot about drop shipping. So the margin advantage in that business is if I’m in a shoe area, I could get Clarks to ship out shoes from the Clarks warehouse. I don’t have to have inventory. I don’t have to control the supply chain. All I have to do is be the front?end receiver of the orders, and then that’s my function in the thing. So marketing my service and then being able to get you to use my service so that I’m a distributor of all this drop shipping. I think Zappos really understands that you don’t control the deliverable on the back side, and you don’t control the speed of delivery. You don’t control how the complaints are managed.
So to many ways I think they understand that you have to be a part of the entire service delivery chain within your brand. A lot of online companies could really learn from that because if you look at most of the complaints??I didn’t get my product; it’s not what I ordered??and what’s the company that fulfilled the order going to say?
I mean all they did was hit some keystrokes, and the breakdown was at another shop. So I think that getting more of your service delivery as part of your control in managing that supply chain is huge to the success of that industry.
Joe: I think you look at Amazon and how they’ve taken prime and used it as a leverage point to bring more books under their control, even the used and now the libraries, that they are controlling the supply chain, even the used section of the supply chain.
Joseph Michelli: Absolutely, and guilty as charged. I’m a prime member. So it definitely pulled me when I was not as actively involved in Amazon before.
Joe: When I look at Zappos, I see a lot of similarities with Starbucks because they don’t necessarily pick all the suppliers. Or do they? I mean not anybody and everybody’s a Zappos supplier, are they?
Joseph Michelli: No. I’ve worked with Starbucks and Zappos and I worked with the Ritz?Carlton, the Pike Place Fish Market in Seattle, and a lot of companies I’ve written books about. There are more similarities than differences when you get to greatness? There is no doubt about it. I’d say one of the strengths that Zappos has at Starbucks can continue to work toward is the fun element of the experience both for the user and for the employee. I think that Zappos brings a playful culture that you won’t see in most other businesses around the world. They don’t see the fun as an impediment to efficiency but as a source for people’s engagement. I think that’s a difference. But as far as the supplier relationships, I think most of them vet their suppliers very carefully. I think Zappos is fairly innovative in their transparency with the suppliers.
There’s not that adversarial relationship that says, “I’m not going to tell you how well your products are flying off my shelf as much as I can hide that because that will give me an advantage in negotiating with you in the future. I won’t pit suppliers against each other. I’ll give you a transparency on sell?through and real?time data so that you can help me figure out how to sell more of your products instead of me trying to get the advantage of you in the negotiation phase.”
So, I think that it’s culture inside, it’s an understanding of the wants, needs and desires of those you serve and it’s having great processes. You put those three things in play, and you’re ready for the current environment of business, which is maybe different from the core of business success a generation of two ago.
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