Zappos has developed long term relationship with customers by working hard. They make customers feel special by going out of their way. This put them ahead of their counterparts. But they also have to struggle sometimes. Once an ad campaign was not received properly and smudged the brand image. Security breach in 2012 also affected its image. Customers are very concerned about security and it is difficult to maintain relationship after such incidences. Some other issues are prices errors and delays in 2011.
Relaying only on customer service means if a customer has bad experience with the company it will be very difficult to gain his confidence again. It reduces number of customers drastically. Zappos has competitive advantage in this area but it should be very careful when promoting customer relations. (Yeung & Ennew, 2012)
Zappos has proven its capabilities in many product portfolios. It has been an investment choice for many investors. It started from shoes and extended to beauty products and outdoor and riding products. Moving to other services like furniture and electronics will require a lot of manual and financial support both at front end and back end. There is growing demand of furniture and electronics in the market. At present Amazon and IKEA are providing these products to the customers.
Competitors’ Analysis: Both the existing players in the market has huge capabilities. They have already tapped the market. Zappos will be new in the market. It will have to deal with the existing standards of the industry. It can rely on the huge customer base. But, most of these customers are loyal towards competitors for these products. By providing excellent services they can make customers change their mind.
Operational Strategies: Both furniture and electronics come under heavy products category. They will require more operational space and efficiency. A separate dedicated warehouse space and transportation will be required. This may increase operating cost. Return of items will also be handled differently. There will be different terms for exchange or returning of products. (SMITH, 2013)
Marketing strategies: Zappos is already famous among customers. It will not require brand marketing but switching of customers from existing competitors to Zappos for these products may take time. Adding new product to the list will give more options to the customers.
Market Scenario: Shoes are cash cows for the Zappos. Cloths and bags also come under this category. Furniture and electronics have high market growth rate, but because of low market share it will be question mark for initial year. Although it has the capability of turning into stars for the company.
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Phillips, J. (2014). The key to competitive advantage is customer satisfaction. Competitive Intelligence Review, 5(1), 64–66. doi:10.1002/cir.3880050111
SMITH, P. (2013). Portfolio management for new products by R. G. Cooper, S. J. Edgett, and E. J. Kleinschmidt. Hamilton, Ontario: McMaster university, 1997. 131 + xi pages. $dollar;35.95 (paperback). Journal of Product Innovation Management, 14(6), 529–530. doi:10.1016/s0737-6782(97)90046-1
Yeung, M. C. H., & Ennew, C. T. (2012). From customer satisfaction to profitability. Journal of Strategic Marketing, 8(4), 313–326. doi:10.1080/09652540010003663