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What are the reasons Zappos beat Endless.com (Amazon) – 16 answers

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Nice discussion on GPlus.com on why Zappos beat Amazon’s Endless.com. Was wondering this morning if there is a metric to measure the value of a creative employee? That is a way of showing the ROI for Zappos CEO Tony Hseih’s empowering approach to his workforce. I guess some of that though is simply down to the fact he is a ‘founding CEO’ (see Ben Horowitz’s excellent post ‘Why We Prefer Founding CEOs’ for example) who brings certain insights about the value of his employees, which a professional CEO may aspire to but finds it much more difficult to deliver in reality. Hint, hint to all those professional CEOs to take a look at the recent research on how creativity can be nurtured in the workforce using a combination of training and financial incentives.

Answer 1

1. SEO–Major brands, makes, models are easier to find 2. Paid search–same as above 3. Customer service including free shipping 4. Inventory (or the appearance of inventory) 5. Website usability

Peter Ostrow Peter Ostrow President and CEO, Technical Communities, Inc.
Answer 2
By no means attempting the definitive answer for the reasons already outlined by my fellow contributors I would like to suggest that it’s at least worth considering (apart from reasons of company leadership), that so closely involving Zappos staff in the success of the business could well be a factor.There’s even a blog piece on CEO Tony Hsieh’s approach which connects the quality of leadership with the quality of the workplace if that’s of interest:-)

Stuart Hall Stuart Hall Ex-Head of Marketing, Community & SEO, Shopping.com UK, eBay Inc.
Answer 3
This question really highlights the complexity of evaluating economic performance against a firm’s strategic business objectives.As phrased, the question is impossible to answer. By what metric have we drawn the conclusion that one firm has “beat” another?From an economic standpoint, firms may tie vastly different performance metrics to their strategic initiatives over time.Overall total revenue, gross margin, and net income may provide insight into the scale and scope of the firm’s market share. Net income / invested IT dollar might lend insight into the effectiveness or efficiency of online operations. Various economic value-added metrics, along with more traditional ROI measures all have some benefits in defining “success” between companies.Once we understand the context of the evaluation, only then may we look at the factors which might impact performance on a comparative basis.

Troy Genzer Troy Genzer Managing Director, www.primaxx.com
Answer 4
i can’t agree more, but i would also add something here is that your answer is total from the side of the company rather the side of the consumer while i believe that there’s a need to add the Perception of the consumers themselves to increase the value of how “Successful” each can be.Cheers,
SC

Samer Chidiac Samer Chidiac Chief Executive Officer, Critical Business Consulting, Quick Refresh

Answer 5

Samer,

My response is typical of the boardroom discussions we get into with senior executives when it concerns aligning performance measures and corporate strategy. It actually wasn’t intended to “answer” the post, but instead highlight the need for more structured thinking.

The anonymous poster appears to share a similar mindset to many management teams in terms of competitor analysis – An ill-defined “perception” of corporate success applied to another competitor.

With respect to consumers, our experience shows that the second-order metrics can quickly deal with buyer behavior.

For example, if one firm has a customer that places a single on-line order for 10 pairs of shoes resulting in $1000 in revenue, is that “better” than 10 customers placing an order for a single pair of $100 shoes…?

In this example, both of those operational profiles result in exactly the same total revenue. However, the strategic response to those different customer segmentations may be completely unique in either situation.

Again, the point is, with a bit more structured thinking, we have the ability to gain actionable insight as to existing market demand, the competitive landscape, and future economic opportunity.

Troy Genzer Troy Genzer Managing Director, www.primaxx.com
Answer 6
I’ll agree I’ll need more clarifications on “beat” from a revenue prespective Zappos is beating Endless.com, but by no means compares to the mothership Amazon. Zappos has spent tens of millions on cust acq and have done a great job keeping them, Endless has very little actual marketing spend. They also currently have a larger sku selection because of their have a mass appeal approach, whereas Endless is appealing to a smaller fragment.

Anonymous Anonymous
Answer 7
When it comes to shareholder returns for publicly traded firms, or free cash flow for private equity, “Revenue” provides very little information about economic value-added or wealth creation. Again, the original inquiry needs to have context so that the quantitative analysis might be actionable or provide meaningful insight to the G+ readers.

Troy Genzer Troy Genzer Managing Director, www.primaxx.com

Answer 8

Not from personal experience of either, but for me it feels like the logistics of delivery and returns policy are key determinants of customer satisfaction in retail sites. Even if you have great brands and good prices the customer experience tends to dominate over repeat purchases.

Chris Yapp Chris Yapp Senior Associate Fellow, Warwick Business School
Answer 9
Amazon certainly set the early bar in assuring consumers that online purchases were safe & secure… but I agree with Chris Yapp’s comment that what distinguishes retail sites today is ease/cost of delivery and RETURNS… ie risk management as a driver of customer satisfaction. Zappo’s is the Nordstrom of the online world – no downside to purchase – among a strong list of brands, good values, and contemporary offerings.

Kirk Thompson Kirk Thompson VP Marketing, Family Platform, Westfield LLC

Answer 10

Zappos appeals to a fashion customer that has some style and quality expectations with identifiable brand names. Its fashion specific and not all over the board. They are good at what they do and back it up with great reviews. Its also easy to navigate.

Martin Todd Martin Todd President, Todd Consulting

Answer 11

When you Google the terms synergy,
additivity, and esprit de corps,
what you get are 3 pictures of Amazon.com CEO Jeff Bezos and his people hugging
Tony Hsieh, and every employee at Zappos. When these
customer services obsessed entrepreneurs and e-commerce innovators met it was
like someone was bringing together twins who had been separated at birth. I
wasn’t there, but I have no doubt they both probably showed up dressed almost
identically and within minutes were busy finishing each other’s sentences and
thoughts.
Reading the question as written: “How did Zappos “beat” Amazon? The short answer is: they didn’t…. The longer answer is: to the degree that Zappos could be considered the winner, history will show it was due to the way the deal was structured.
– Zappos received significantly more than its most optimistic valuation and- The deal was paid for in a stock which that consistently outperforms the marketWhen you set aside the differences in each company’s unique bizarrerie, and je ne sais quoic, as those qualities manifest themselves in their respective corporate circumjacence’s, what you find is that in more ways than not: Zappos is Amazon, and Amazon is Zappos.
– From Amazon’s perspective: This deal just makes sense.
– From Zappos’s perspective: because of Amazons size, strength, market presence (domination), and a brand awareness that has been fine tuned to attract and keep customers, this deal opens doors Zappos could only dream of.When he started to assemble his due diligence on Zappos, Bezos surely thought he was reading his own business model and looking in the mirror at the same time. He quickly concluded he wanted to buy them, and not change anything. That’s because the most impressive assets Zappos and Amazon each have are the quality of their people augmented by the investment that has been made in their development. This marriage of consumer driven, likeminded talent is a win for everyone.
Elizabeth Jordan Elizabeth Jordan “Quant”, Elizabeth Jordan Advisors LLC
Answer 12
Some great answers already but I have to lean toward two areas, aggressive and noteworthy advertising and PR, along with aggressive early pricing.

Zappos seemed to take the AOL approach a few years back, they were everywhere, talked about by everyone, put their name on everything and saturated the internet and the mail with marketing. That alone drove lots of eyeballs to the site.
The original site had the feel of a warehouse store, and I found t hard to shop, yet easy to drill down to specific items and check out was easy enough. Superior customer service, ease of returns helped the word of mouth.
The early aggressive pricing online with Zappos doing lots of affiliate, shopping engines, comparison sites and data feeds so that Zappos showed up everywhere with consistently lower prices build a reputation of great prices and great customer service.
Everyone knows who Zappos is, most people have no idea who Endless is.
Michael Margolies Michael Margolies Creative Ops, MarCom, eCommerce Consultant, Michael Margolies Photography & Design
Answer 13
I agree with Troy that we will need to establish the metrics by which we can say that Zappos can beat Endless.com. Zappos has a great site, huge selection and excellent customer service. If they’re measured from a customer satisfaction perspective they will be deemed as a huge success but if they’re judged from a pure P&L perspective they will be viewed as a very marginal performer.

Jim Mazarakis Jim Mazarakis EVP & CIO , WSFS Bank
Answer 14
Zappos is a shoe sales. Endless.com is more varied and not targeted to the same market as Zappos

Joe Peerson Joe Peerson Independent Consultant, Joe Peerson
Answer 15
Zappos has a greater selection of product and it’s website is easier to navigate.

James Bisaha James Bisaha Consultant, Self Employed

Answer 16

The short answer is superior service and ease of use.

Ray Williams Ray Williams Founder, Consultant, Enterprise Solutions