Pants Co. Models Business After Zappos
Zappos.com
is known for its incredibly loyal customer base. The company earned that
loyalty by providing levels of service rarely seen in either online or
store environments. It should not be hard to understand then that others
in retailing are looking to replicate some of the Zappos’ magic for themselves.
A case in point
is Bonobos, Inc., an online apparel site with the goal of delivering
high-quality pants that fit men without the need to enter a fitting room.
The pants,
according to an Associated Press (AP) report, retail for $118
and come with a return policy very much like Zappos. As a message on
the company’s site says, “Any pant, any time, any reason. We’ll pay for
standard shipping both ways.” Bonobos says it will even take exchanges
on pants that have been hemmed, washed and/or worn. The company,
expects returns on orders and, in fact, encourages consumers to order
pants in several sizes to make sure they get the fit they want.
Last year,
the company earned $1.6 million in revenue and it expects to double or
triple that this year. While Bonobos has yet to turn a profit, it believes
its commitment to serving consumers will enable it to be successful in
the future. It has also followed in Zappos’ footsteps and begun to expand
its product selection beyond pants to include polor shirts, shorts and
swim trunks.
Discussion
Questions: Is the Zappos model something that can work for many other
businesses in retailing or is it some type of anomaly? Is Bonobos on
the right track for success?
The Zappos business model can be copied by anyone. What sets Zappos apart is its culture and how the executives have seeded, built, and groomed the culture every step of the way. That is an art that is the cornerstone of success. It’s not in the ‘science of money’ model.
If a retailer embeds excellent customer service and reasonable prices into its DNA and then makes those policies part of its essence, it can build a loyal following.
Consumers are rarely disappointed by the customer service at Zappos. Can they buy the same products for less elsewhere? Frequently they can. But Zappos is close enough in price that it’s worthwhile to pay a little extra for the guaranteed great service.
If Bonobos does the same for men’s pants, it too can build a loyal customer base. Bonobos must also find that tipping point in consumers’ heads, where price does not negate service. If they can do this, they stand a better than even chance for success.
Zappos rose to prominence for other reasons along with its legendary customer service (which, by the way, has become the standard for eCommerce shoe companies).
Earlier on, the company was masterful at Search Engine Optimization–including buying up domain names and sites that appeared to be different, but still led you back to Zappos when it was time to actually make the purchase.
Of course, the real growth skyrocket came from that legendary service, but it alone will not be enough. I think the forces that led Zappos to its unique position may no longer be in play (for example, having all roads lead back to your site)…but you can NEVER go wrong with excellent customer service. As long as your prices can support it, you can NEVER go wrong.
The Zappos model is no longer an an anomaly because others have had to emulate Zappos in order to compete against them and thanks to Zappos, anyone who has touched Zappos has raised expectations!
For example, free shipping both ways, considered to be an over-the-top perk in the past, is becoming the standard for anyone selling shoes on the Internet. Free shipping both ways isn’t just about saving money; it is essentially enabling e-customers to shop at home, thereby encouraging multiple purchases (even when return shipping is free, returning something by mail is a pain). Zappos has quietly retracted its no-longer-a-“surprise” overnight shipping as customers began to expect it. (If you speak with Zappos about overnight shipping, they will grant it to you free of charge once, then redirect to you to their premium site and encourage you to use it going forward.)
As for Zappos contrarian customer service model (posting its 800 number everywhere rather than discouraging person-to-person interactions, staying on the phone with customers for sometimes hours), I expect that also will be modified in a post-Amazon-partnership world. After all, Jeff Bezos has a clear POV on the difference between “customer experience” and “customer service” (the latter is only for when things go off the rails).
Did Zappos partner with Amazon because it was on a roll that was accelerating or because its model was not sustainable moving into the thinner $2 billion plus air? Either way, Zappos has paved the way for many offspring like Bonobos that will no doubt be happy to hit that first billion!
I was thinking about this subject from a different perspective.
I am nearing the end of the soles on my favorite hiking boots. The last time this happened, the salesman told me my brand and model had been discontinued but they had two pair left. I should have bought both, but I figured that was what he wanted me to do. I am resigned to the fact that now I am going to have to look for a new brand and model. But my thought was “I wonder if manufacturers should extend lives of their brands so that online customers can repeat a successful experience.”
Everyone understands that the challenge with online clothing sales is ensuring the customers that they are not going to have more hassle than it would be to visit a store. Is it easier to order online than drive to the store and try things on before bringing them home? A lot depends on your age and phase of life. I have worn the same pant and shirt size since my mid twenties, so I can be pretty confident in what I order. And, I have never been pregnant and do not expect a challenge from menopause.
I think the reason people shop online is because it is easier, they can get more information, and they feel they are making the intelligent choice. Price is also a big factor. Bonobos must ensure they can do all these things better than a physical store.
Brick and mortar retailers should take note of this one. Guys hate using fitting rooms because they don’t get service and they hate schlepping in and out to service themselves, and shopping with their bff’s who can run for different sizes and styles?…. Not so much. If they actually do go to the store themselves, most of the time they either buy what fits them the last time they bought pants or they send their significant other to pick out a variety and bring them home for try-on, never having to enter the fitting room. This online retailer gives guys a way to buy with no commitment and never having to get dressed and leave their home let alone use a fitting room! Brilliant!
Knowing what another company does and replicating it are two utterly different things.
As noted above, Zappos’ service model is a part of the company’s brand DNA and is embraced by all their management and employees as an integral part of the overall company culture.
Can having a single-minded focus on customer satisfaction build customer satisfaction and loyalty and drive incremental sales? Obviously.
Can a company whose culture has not included customer satisfaction at any cost in the past migrate to this model? Maybe.
A company’s culture, over time, attracts and retains employees who are comfortable with that culture. The breadth and depth of the change to integrate this concept will determine the likelihood of success. Having had experience in trying to drive a major change like this, my guess is that Zappos’ model will not be widely replicated across the industry.
My first instinct is to question the applicability of the model to the product category. I agree with all points mentioned so far in terms of replicating the Zappos model. I wonder, however, if men’s pants really are analogous to shoes…predominantly women’s shoes. With all due respect, and one writer already brought this up, many men know precisely what size they wear, and they buy it without trying it on. Consequently, there isn’t much risk in buying pants online. Moreover, most mature men stay with evergreen brands or store loyalties because they simply do not have a motivation to change. For the younger men, with whom fashion and trend provide significant benefit, and for whom the brands and fits tend to change, yes, perhaps this is important. And still, I wonder…men’s pants? Is there really a huge market for high customer service in this product category?
Like it or not, all shoes of the same size do not fit the same. And the minor variations in fit for shoes have an enormous impact on satisfaction and comfort. Minor variations in inseam and waist do not have anywhere near the same impact. If a given pant is off by a quarter inch in the rise, I probably won’t know. If it’s off by the same in the waist, again, either I won’t know, or that is what belt’s are for.
Could be me. Data points of one are pretty much useless, and they have sold over a million dollars. Why wasn’t that level of volume profitable, by the way?
Zappos is the ultimate online business model. It incorporates the biggest reason some people go brick and mortar rather than shop online. They want to see and touch what they buy.
And it goes further; in fact, this model provides less risk regarding return of merchandise. The full refund return that Zappos (and Bonobos) offer counters the trend of “store credit only” now spreading in brick and mortar retailers.
Online retailing will continue to grow. Current dollar transactions online will eventually surpass comparable brick & mortar operators. Online retailers that can execute this model will lead that transition and be hugely successful.
Most retailers–in fact most organizations–will not be able to duplicate Zappos’ culture just like most airlines could not duplicate Southwest.
Until retailers are truly willing to put employees first and build a hiring and retention system focusing on hiring and retention of customer service attitude, it will not happen.
Who else in the retail world is going to pay a new employee $2000.00 to quit within the first two weeks on the job?
“While Bonobos has yet to turn a profit, it believes its commitment to serving consumers will enable it to be successful in the future”
Well now, those are fateful words we’ve heard in the online world before, haven’t we?! But back to the specific question asked. I’m a little unclear on exactly what “the Zappos business model” is: certainly it must be more than having a generous return policy; and I’m with those who think finding out what that “more” is–let alone replicating it–is no easy task. Of course, I wish them luck in trying.
High levels of customer service and a consumer focus is always a good thing. However, as others have pointed out, Zappos has also had lead time in the online market. That factor will not be duplicated. Additionally, there is the other strong factor of price on the Internet. As some posters have noted, it is not clear that pants are the item that can be sold at higher prices due to service. With many shoes there are a limited availability of styles. This translates to less price erosion, and women in particular will fix on a particular style. In men’s clothing, I do not see an equivalent. Bonobos will have to match value. Do they do that at $118? Time will tell, but honoring customers seems ALWAYS to be smart retailing these days with so much choice.
One other thing that sets Bonobos apart is its avoidance of major mass-media investment. It’s an “organic” brand like Zappos in the sense that people talk about it, and with a zealousness about minimizing or eliminating a customer’s risk for trial, they have a great chance to succeed.
Their pants aren’t cheap and aren’t for everyone, which is smart, focused, and leverageable. Their combination of customer centricity, brand discipline, and (presumably) a sound financial model means they have a much better chance for success than the average online merchant.
I agree that the culture of Zappos and the commitment to extraordinary customer experience are what separates Zappos from traditional e-commerce sites. The idea of actually structuring and supporting the experience that the best customers desire is revolutionary (somewhat disturbing that it is!)
At the same time, I wonder how much the Zappos model also leverages the passion that some women (and some men) feel towards shoes. The “I can never have enough shoes” enthusiasm is clearly not replicated in pants. I believe the pants company can achieve a level of success, but will probably not soar to the heights of Zappos, since they have not yet zoned in on a passion that can motivate customers to heights of shopping bliss. 🙂