September 15, 2006

Multichannel Question: Zappos

Here is a question for you. Multichannel pundits extol the virtues of multichannel marketing. They tell us that our customers expect us to have retail, online and catalog channels, allowing the customer to purchase what they want, where they want, when they want.

If multichannel marketing is so essential to our toolbox, then how do we explain the rampant success of Zappos? In an October 2005 article, CEO Tony Hsieh said the following:
"We focus the company on providing the absolute best service and shopping experience and let word of mouth be our marketing. By doing so, we've historically been able to more than double sales year over year for all six years of the company`s existence."

This is a business that should top one billion dollars in net sales in the next four years. In other words, this business will have gone from zero to $1,000,000,000 in annual sales in just ten years, without a catalog channel, without retail stores, without the multichannel experience we are being told we absolutely must have.

We are constantly reminded that customers purchase from brands because of merchandise, price, convenience, and customer service. How else do we explain why a customer avoids purchasing a pair of Mary-Jane shoes at a highly convenient and respected multichannel retailer like Brooks Brothers, and instead purchase the shoes at a single-channel business like Zappos?

What is your opinion on this topic?

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