Business Case Study: Zappos

Case Study
1) Before Zappos was founded in 1999 the nature of competition in the industry of selling shoes was very different. Business were brick and mortar stores. These businesses relied on the top brands to sell mainly due to the limited shelf space available to them in the store. This led to businesses having very little range in terms of range, size, and colour. Businesses couldn’t risk buying unproven brands as the cost of them failing was too high in terms of storage and with a limited market generally in the city the store is located it would be harder to find the niche market and cater for it.

Zappos absolutely rocked this market to its core by changing some of the key concepts in this market. In the early stages Zappos focused

This is seen in 2008 when the USA went into recession retail stores recording double digits drops in sales in September and October while Zappos continued to grow albeit at a slower rate. This is down to the superior selection Zappos has in its online store than retail outlets have in theirs also the ease of access to the website compared to having to travel to the physical store encouraged people to go online. With Zappos is buying out some of its competitors like 6pm and expanding into new markets that its customer wants such as handbags and clothes, Zappos is minimizing its risks from changes in the business environment, so long as customer demand is there for a product Zappos will support it, but because it constantly monitors the progress of its sales and can see which if the popularity is dropping and it can cancel an order if needs be leading to less unwanted stock. By this constant monitoring of these variables and using customer feedback Zappos is able to avoid changing in the business environment having major effects on its

It basically shows the business in the center with the enivorment in terms of suppilers, customers, Barriers to entry and threats of subsitutes around it. The diagram below illustrates this. Zappos had few online competitors to start with such as www.shoebuy.com whose model was very simliar to that of Zappos.The bargining power of customer wasn’t very big as Zappos had a lot of niche products difficult to find elsewhere while later when they brought on more bigger brands then the customer power increased as they could get the products elsewhere. The barging power of suppliers at the start was strong as they could the bigger suppliers could destory Zappos by cutting its support but as the internet grow there power decreased due to cheap knock-offs being sold online. The suppliers of the shoes had no choice. They had to go online or lose profits. The barriers to entry where few all you needed was a website and suppliers and you were go to go. Thiss main barrier would have been getting established and trusted by your target market. This business model I one that is replacing brick and mortar stores. It is at the moment unlikely that a new substitute product will become availible but technology is constantly making advancements at a rate that products are being replaced on a yearly basic. With the new wearable technoly that is coming in it is possible that people could be shoes etc from this or