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 / Autumn 2010 / Issue 60(originally published by Booz & Company)


At Zappos, Culture Pays

The thriving Internet shoe retailer has made its name and a lot of money by being eccentric.

One clue that something a little weird is happening at Zappos can be found near the bottom of the home page of the company’s website, where you’ll find lists with headings such as “Shop with Us” and “Customer Service,” beneath pictures of Anne Klein, Rockport, and Nike footwear; New Balance shirts; and Tommy Bahama shorts. Buried in one list is a link advising, “Don’t ever click here.” I did, of course, and the link opened a YouTube video of the Muppet rock band performing, as lead singer Beaker lip-syncs, “Never gonna give you up. Never gonna let you down.” It is a not-so-subtle message to Zappos’ customers and perhaps to its employees as well.

Another link opened a company-produced video in which employees talk about their favorite Zappos values — there are 10 values in total — with the same conviction and enthusiasm that the Muppet band brings to its musical antics. A clear winner: “Create fun and a little weirdness.”

Weirdness may not be the first thing that comes to mind when you think of shoe retailing, but then again neither are things like innovation, massive growth, or a large payoff from a huge acquisition. All of those apply to Zappos, however, where a little weirdness — combined with faith that putting extraordinary effort into building a desirable company culture — has provided a sure path to business success.

Zappos began selling shoes and other products online in 1999, became profitable four years later (the beginning of a still-unbroken run of annual earnings gains) and reached more than US$1 billion in sales by 2009. That was a big year for Zappos in other ways as well. The company was rewarded with Business Week’s Customer Service Champ designation, inclusion on Fortune’s list of the 100 Best Companies to Work For, and an A+ rating by the Better Business Bureau. Also in 2009, Amazon purchased Zappos for 10 million Amazon shares, worth almost $928 million at the time. Zappos’ employees divvied up $40 million in cash and restricted stock and were given assurances that the Zappos management would remain in place.

At the top of the list of Zappos’ values is “Deliver WOW through service.” In fact, Zappos describes itself as a service company that happens to sell shoes and other products. This value is reflected in such niceties as a 365-day return policy with free shipping both ways, 24/7 customer phone lines, live online help, and customer product ratings — none of which is all that weird. But things do become, if not weirder, then at least different, when seen from the perspective of Aaron Magness, Zappos’ director of business development and brand marketing. He told me, “I read about how Zappos is focused on customer service. It isn’t. It’s focused on company culture, which leads to customer service. We don’t talk about customer service; we allow it to happen on its own by having the right people.”

The right people are rare. Only about one out of 100 applicants passes a hiring process that is weighted 50 percent on job skills and 50 percent on the potential to mesh with Zappos’ culture. Indeed, if you want to get a job at Zappos, the value to emblematize most is “be humble” — avoid using I in favor of we. “Humbleness allows for greater collaboration,” says Magness, sounding more and more like a self-help manual all the time.

Acing the interview process isn’t enough to guarantee continued employment. Every new hire undergoes four weeks of training, during which the company culture must be committed to memory. The second week includes dealing with customers by working the telephones. One newly hired senior person thought this task beneath him. He was treated like the apostate that he was. “We sent him home,” Magness offers bluntly.

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