Zappos SWOT Analysis: A Comfortable Report!

zappos swot analysis

From a shoe-selling company in 1999, Zappos has grown to a billion-dollar company with over 1500 employees. This Zappos SWOT analysis will highlight the strengths and weaknesses of this popular shoe company. The 365-day return policy and 24-hour customer support offered by Zappos are examples of their well-known commitment to providing excellent customer service. They were among the first companies to sell shoes online and have garnered a reputation for carrying an extensive inventory of footwear.

Zappos now sells handbags, clothing, and other accessories in addition to shoes. The biggest eCommerce brand, Amazon acquired this company in July 2009. Zappos didn’t achieve its success overnight. But what made the company so successful? Let’s take a look at a Zappos SWOT analysis to find out their strengths, weaknesses, opportunities, and threats against competitors.

Zappos SWOT Analysis: At A Glance

Company NameZappos
FoundedJuly 12, 1999
FoundersNick Swinmurn
CEOKedar Deshpande
HeadquarterLas Vegas, Nevada, U.S.
Annual Revenue$2 Billion (FY 2015)

Zappos History Video

Zappos SWOT Analysis

When buying shoes, Zappos is the first name that comes to anyone’s mind. Being one of the biggest retailers of shoes and other products in the US market, Zappos has always been regarded highly for its mentality to go beyond for its customers. Also, other stories contribute to their success. Today, in our Zappos SWOT analysis, we will have a deeper view of what makes the company great!

 Zappos SWOT Analysis Strengths

strengths of zappos

Zappos is a big brand whose success came from some of its core strengths. Strengths are a company’s internal elements that help it stand against its competitors. In the Zappos SWOT analysis, we will discuss a few company strengths.

Strong Customer Relationship: Customers are the key to any business, and people at Zappos believe that more than anything. Hence, the customer relationship is so good. Zappos is obsessed with providing the best customer service to create lifelong customer relationships. The company’s success heavily relies on this element of the company. Several case studies have been conducted on how well Zappos maintains customer relationships.

Exciting Work Environment: Zappos is also known for its excellent working culture. The environment of the Zappos office is fun, weird, and full of family spirit. The culture highly focuses on happiness and will do everything to keep the employees happy and motivated. Such a kind of working culture is known as customer-centric, and keeping the employees happy is the best way to achieve that.

The Brand Image: Zappos has a unique branding approach, starting with its employees. What Zappos does is quite magnificent. Zappo’s new employees should undergo a training period (f weeks) where the brand’s core values are implemented. These proceed to 2 weeks of phone calls to customers, where the branding through the service is done. This has made the brand a customer-friendly organization in the minds of the customers.

Zappos SWOT Analysis Weaknesses

weaknesses of zappos

Just like there are good internal factors, there are also bad ones. Weaknesses are those internal factors that need nourishment. Like any other company, Zappos has its fair share of weaknesses, which we will explain in the Zappos SWOT analysis.

Holacracy Failure: Zappos has adopted a different type of management structure called the Holocracy. This organogram is a decentralized approach to management where there will be no particular job designation. Therefore, there is no manager either. However, this approach of Zappos has proven to be quite disoriented. The issue is with the employee where a lack of morals has been noticed among the employees, and just because there is no manager, the productivity has gotten lower.

Dependency on Local Market: Zappos is highly dependent on the local market. More than 90% of its market share is from the USA alone. The other countries are Canada (0.83%), the UK (0.55%), and the Republic of Korea (0.43%). Even though the company earns a high amount of revenue from the US market if the company focuses on sustainability, depending on the local market is not a very good idea.

Data Breach: In 2012, the company experienced a data security travesty where hackers stole personal information about customers. The hacked information contains the customers’ addresses, names, and numbers. Fortunately, the hackers were unable to breach credit card information. Since then, the company has been constantly under supervision regarding data security.

Zappos SWOT Analysis Opportunities

opportunities for zappos

When it comes to a company’s external environment, the opportunities are the positive aspects. They give a company a chance to stay ahead of the competition. Hence, it is extremely important to take the opportunity and flourish. As a company, Zappos has a few possibilities. In the next section of the Zappos SWOT Analysis, we will talk about them.

Expand Overseas: As we mentioned already, more than 90% of the company’s consumers are from the USA. So, that gives the company a huge opportunity to expand to other countries and start capturing those markets as well. Countries like Canada and Mexico have good demand. The company already operates in those countries but on a smaller scale. Upscaling will result in a much better outcome.

Bring Artificial Intelligence: Zappos can introduce AI into their products to make the line even more effective and efficient. The company has already used artificial intelligence in its search engine, and the outcome is high. The system is called Genetic Algorithms, which uses historical data and aligns it with new keywords to provide better-personalized results. The result of the new system has already given the company more than a million unique search queries, which is a big increase compared to previous periods.

Bring New Products: Zappos offers a wide variety of products. However, what they most sell in the shoe. This is the product Zappos started its business with. Aside from shoes, the company also sells bags, clothing, accessories, and other products. However, despite their big product portfolio, they mostly sell shoes. This opens an opportunity for them to focus on other products, such as sports gear and outdoor gear.

Zappos SWOT Analysis Threats

threats for zappos

Another aspect of the macro environment is the threats that can affect the business model of any company. Threats can come from any external element, such as digitalization, economic instability, changes of policy, etc. Threats are an essential part of a business like Zappos. Therefore, these aspects should never be neglected. Today, we are going to discuss those in the Zappos SWOT analysis.

An Unstable Global Economy: The world economy has been going through a lot lately. The recent conflicts between Russia and Ukraine, which have resulted in war, have significantly impacted the global economy. The prices of products have been rising at a rapid pace. Products such as commodities and fuel have seen the biggest rise among all. This economic instability can negatively impact its customers, as their ability to purchase will decrease, leading to a decrease in revenue.

Customer Bargaining Power: At present, customers have higher bargaining power as compared to any company. The same has been noticed for Zappos as well. The presence of the online market has put Zappos backstage as customers can now choose from other competitors easily. As a result, the sale of Zappos products depends highly on the customer’s preference.

New Entrants: In a SWOT analysis for Zappos, there is an open chance of new entrants in the commodities market, especially shoes, which Zappos sells the most. Besides, the business model of Zappos is quite easy to relocate, allowing newer businesses to copy and start their business. Furthermore, more recent entrants focus heavily on cost leadership, which leads to offering products at a very low price.

Zappos SWOT Analysis Overview Template

zappos swot analysis overview template

Zappos SWOT Analysis Conclusion and Recommendations

Zappos can advance its market with these recommendations from industry experts.

  • Keep the customers happy. Customer satisfaction should always remain at its highest peak.
  • Focus on globalization. Zappos should try to expand its business to other countries to grab more customers.
  • Zappos should bring new products and sell them as much as possible. It should move away from its present dependency on shoe items.
  • Introduce artificial intelligence to operations and products to make the line more efficient, fast, economical, and productive.
  • Strengthen data security so that no further data breaches can occur.

FAQs for SWOT Analysis of Zappos

What is Zappos’s value proposition?

Zappos’s value proposition centers on an unmatched customer experience, offering an extensive selection, free shipping, and a 365-day return policy. They prioritize customer satisfaction above all else.

What are the strengths of Zappos?

Zappos excels in customer service, boasting a loyal customer base. Their vast product range, efficient shipping, and easy returns are strengths. Additionally, their innovative approach to e-commerce sets them apart.

What are the weaknesses of Zappos?

Zappos faces challenges with high operational costs and potential inventory management issues. Intense competition in the online retail sector poses a threat. Adapting to changing consumer preferences and market trends is crucial.

As a business, Zappos has always been regarded as one of the best in terms of customer satisfaction. One thing they can do better than others is keep customers happy. However, only customer satisfaction won’t sustain a company in the present market dynamics. Therefore, additional measures need to be taken.

Therefore, our Zappos SWOT Analysis is a great way to understand what the company can do to succeed in the future. We tried to cover all the aspects of SWOT analysis which shows what the company is good at and what they should consider improving. This is a useful tool for effective higher management decisions.

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