January 03, 2008

Zappos: The Legend Continues

At 8:40pm Wednesday evening, I ordered a pair of shoes from Zappos.

At 5:00pm Thursday afternoon, my pair of shoes arrived at my front door. Free shipping, free returns (although we know they embed a $3 shipping charge in the price of the shoe, and we willingly accept that for this kind of customer service).

In three years, when we in the "multi-channel" (aka catalog) industry are no longer able to send catalogs on a mass-scale to potential (and many existing) customers, we'll need to consider a new business model.

We'll take the fifty percent of our catalog budget that we're no longer allowed to use on prospecting and online customer mailings, and we'll split it two ways.

First, we'll use half of that money on online marketing strategies.

Second, we'll upgrade our distribution center capabilities, and we'll eat the $14.95 we charge for shipping today, instead moving much closer to a business model that Zappos utilizes.

We should play out these scenarios in 2008, using Multichannel Forensics to understand what our future might look like. We have an opportunity to be proactive.

We should pay close attention to Zappos. They built a half-billion-dollar-plus business in less than a decade, without catalogs. They did it by treating the customer extremely well.