MGT302 CA4

Trident University International

MGT302 Organization Behavior and Teamwork

 Zappos versus Amazon

The managerial operations of an organization have a prominent impact on the rate or

work accomplishment; inclusion of diversities, acknowledgement and reward system makes an

optimistic work environment. Organizations can only reap the benefits of diversity if they give it

the time, effort, and care it deserves. The attainment of business objectives is expected to be

significantly impacted by this. A solid organizational culture is the outcome of effective religious

management. Additionally, it is anticipated that the company's competitiveness will be enhanced

by its robust culture (Bakhri et al., 2018).

Human Resource Managers in Australia identified the importance of attitude and

workforce diversity management for incorporating a quality outcome towards the company

(Davis et al., 2016). As a result, it's clear that organizations who place a strong emphasis on

customer service should prioritize promoting diversity education, awareness, and support.

The History and Culture of Zappos

Zappos.com, one of the first online clothing and shoe store was established in Nevada,

United States. Initiated by Nick Swinmurn, on year 1999 by the domain name of “Shoesite.com”.

The brand however, was altered into “Zappos” after the Spanish term “zappatos”, from which

means shoes. In its early years of 1999-2000, Zappos gained a gross sale of $1.6 million. The

company started from Nick Swinmurn accepting orders online and then personally buying the

shoes from the physical stores and shipping them online. It was year 2003 that the management

realized that customer service requires full value chain from order processing, fulfillment and

shipment.
 Moreover, Zappos was gaining notoriety attributable to its cutting-edge approaches to

both business culture and customer service. Also, even the most established businesses in other

sectors look up to Zappos and its commitment to excellence in work and service. The key values

of Zappos are applicable to each employee, regardless of how they want to go about their work.

Zappos had a tough go of it in the beginning after emerging in the middle of the dot-com boom

in 1999.

It only proves the dedication of Swinmurn in prioritizing customer service. Hence, on the

preceding years, the net worth of the company multiplied sales and brought in $8.6 million. By

achieving $184 million gross sales, the company gained $35 million investment from Sequoia

Capital, since then increase of the company’s net worth continued through online sales. The

success of the company is due to management operation called “Zappos Experience” (Michelli,

2011). The company created a revolutionary strategy in its management processes in prioritizing

its employees and customers. Through engaging an energetic workplace culture, its employees

received special treatment of gaining and receiving compensation. In the early 21 st century,

Zappos’ alternative strategies in management organization became a threat and a lesson to other

company. However, the company experienced pitfalls in terms of manpower management in

monitoring the inventory and sales. Even with the company’s exceptional rate in customers’

service, the company struggled with managing its resources.

Hence, the company Zappos proved that working in the means of traditional approaches

does equate corporation equality – nevertheless, engaging in an alternative method through

calculated risk shall benefit the company’s development.

 The History and Culture of Amazon

As competition arises between businesses in the 21 st century, various approaches on

workplace culture are documented. However, traditional competitive advantages, such as

economies of scale, are becoming less reliable for companies in the e-commerce sector (Mellahi

et al., 2000). The company Amazon.com is a well-known organization in terms of internet store

and electronic commerce; it emphases on digital streaming, cloud computing, artificial

intelligence and online advertising. Amazon was established in year 1994 by Jeff Bezos in

Bellevue, Washington. The business launched initially as an online platform for book selling, but

over time it has evolved into a wide variety of other products. Hence, it expanded into numerous

affiliates comprising Amazon Lab126 (computer hardware R&D), Amazon Web Services (cloud

computing), Kuiper Systems (satellite Internet) and Zoox (autonomous vehicles).

Jeff Bezos is acknowledged for his approach and reputation in "aggressive" reinvestment

as a disruptor of reputable commerce. Hence, the aforementioned affiliation of Amazon is a

renowned work of Jeff Bezos, the CEO of Amazon. In the year 2004, the management team of

Amazon began monitoring the operations of Zappos and exploring the possibility of purchasing

the organization. By that time, Jeff Bezos reasoned that selling footwears might be too

complicated for the platform of online market.

However, over the years, Zappos became a threat to Amazon – it seemed like customers

had the heart of Zappos even though Amazon.com offer products on a cheaper scale. As a result

of Amazon's economic weakness, Jeff Bezos has finally made numerous efforts to get in

communication with Zappos in order to make a substantial offer to acquire the company. It was
on year 2009, where Zappos surprised its employees and announced being sold to the company

of Amazon. In order to acquire the online shoe store, Amazon would make a payment of $10

million in addition to 10 million shares of Amazon equity capital. In 2009, by the time purchase

was finally finalized, its value was calculated to be $1.2 billion. Following the completion of the

acquisition, the overall figure of outstanding shares was 433 million; hence, the figure of shares

that were traded for the company, Zappos was 2.31 percent of the total. (Stone, 2009). According

to Hsieh (one of the stockholders of Zappos), the relationship between the two companies is

governed by "An agreement that specifically recognizes the uniqueness of Zappos' culture and

Amazon's resolve to protect it." Even though it is purchased by Amazon, Zappos continues to

function as its own independent corporation, having complete control over its management and

business activities. Nevertheless, Zappos' business practices have been significantly altered as a

result of Amazon's influence. In September of 2012, Zappos cooperated with Amazon in an

effort to streamline its business by handing over ownership of the company's two fulfillment

centers located in the state of Kentucky.

The Decision of Amazon to Purchase Zappos

The concept of taking managerial risk by the decision of the CEO has proven to provide

positive outcome and the likelihood of extreme loss in an organization. Both companies, Zappos

and Amazon have different approaches in managerial strategies. As time passed by, the unity of

both companies has been beneficial for either side: Zappos acquiring extra revenue while gaining

confidence on taking risks and Amazon gaining knowledge on creating an energetic culture and

prioritizing customer service. As a gist, the decision of Amazon acquiring Zappos has proven to

be economically advantageous through offering reasonable costs, free delivery and unconditional

returns for customer satisfactory.

 Conclusion

In conclusion, every company decision should be measured profitability and thoughtfully

deliberated after sufficient time, research, and leadership have been invested. Meanwhile,

Zappos is incomparable.  Amazon.com has become a household name in the age of online

shopping. In an unusual agreement, online shoe store Zappos was purchased by industry giant

Amazon.com, with the caveat that Amazon would stay out of Zappos' way so long as it reached

specific financial goals. Zappos proved the importance of prioritizing the needs of both

employees and customers. On the other hand, Amazon developed a business strategy of taking

calculated risks. Amazon acquiring Zappos have proven to be economically effective and created

a revolution in e-commerce, through cultivating an interesting company culture and

implementing innovative business tactics.

 References

Davis, P. J., Frolova, Y., & Callahan, W. (2016). Workplace diversity management in Australia:

What do managers think and what are organisations doing? Equality, Diversity and

Inclusion an International Journal, 35(2), 81-98. https://doi.org/10.1108/EDI-03-2015-

0020

Mellahi, K., & Johnson, M. (2000). Does it pay to be a first mover in e.commerce? the case of

amazon.com. Management Decision, 38(7), 445-452. doi:https://doi-

org.ezproxy2016.trident.edu/10.1108/00251740010373458

Michelli, J. A. (2011;2012;). The zappos experience: 5 principles to inspire, engage, and wow.

McGraw-Hill Education.

Stone, B. (2009). Amazon.com acquiring the online shoe retailer zappos; amazon to acquire

zappos, a shoe site: With $900 million deal, book giant makes largest acquisition in its

history. International Herald Tribune