Zappos.com Update - July 24, 2008

Dear Investors, Employees, Partners, and Friends of Zappos:

With the WSA shoe show coming up next week, I thought it would be
a good time to send out another company update.

As I mentioned in the last update at the beginning of this year,
our goal is to break $1 billion in gross merchandise sales for
2008. The economy has been tough, but so far we are still on track
to hit that number. Back in 2003, we had set a the goal of hitting
$1 billion by 2010, so we’re very excited that we’re on track to
hit the $1 billion milestone ahead of our original goal!

For those who don’t know, here are our historical gross
merchandise sales numbers:

1999: Almost nothing
2000: $ 1.6 mm
2001: $ 8.6 mm
2002: $ 32 mm
2003: $ 70 mm
2004: $184 mm
2005: $370 mm
2006: $597 mm
2007: $840 mm
2008: Over $1 billion (goal)

Here are some of the highlights so far for 2008:

  • We grew our customer base to a total of over 8.2 million paying

customers, meaning that almost 3% of the US population has
bought from Zappos.

  • With our focus on customer service, our customers continue to be

extremely loyal to us. On any given day, approximately 75% of
our sales are from repeat customers.

  • We now carry more than 4 million items in our warehouse!

  • We began our partnership with Merrell, and are now selling them

on our site.

  • We completed our magalog for fall, and will be dropping 1

million copies of it in a few weeks. We’re very excited about
this because the quality is a big step above our previous
magalogs. Special thanks to our vendor partners who
helped support our magalog project!

  • We continued to grow sales in all of our categories, especially

our non-footwear categories, including apparel, handbags,
sunglasses, watches — even cookware and electronics! Our
apparel category is up 250% from last year, making us a “head to
toe” destination for many of our partners and customers.

  • We’ve continued investing in our warehouse operations to handle

other product categories, including the implementation of
technology from Kiva Systems.

  • We ran a television ad campaign in the spring which has helped

with our branding efforts. You can see the commercial here:

http://www.youtube.com/watch?v=uxBWfqDAQkg

  • We’ve been doing a lot of work behind the scenes for our new

technology platform which we are internally calling “Zeta”.
Among many other things, Zeta offers better search and browsing,
and you can take a sneak peak at Zeta here:

http://zeta.zappos.com

  • Our “Powered by Zappos” program continues to grow and will soon

be moved over to our new Zeta platform, which will enable us to
help power more of our vendors’ ecommerce operations.

  • Our company blogs have taken a life of their own and have turned

out to be a great way for us to share our unique company culture
with the rest of the world:

http://blogs.zappos.com

  • The 2008 edition of our culture book has just arrived. Every

year, we ask all of our employees to write a few paragraphs
about what the Zappos culture means to them, and except for
typos, it’s unedited. This year’s edition is bigger and better
than ever before! Be sure to pick up a copy if you ever stop by
our offices!

  • We continued and improved our unique training program for new

hires in Las Vegas. All new hires in our Las Vegas office,
regardless of what department they were actually hired for, must
first go through 4 weeks of Customer Loyalty training (answering
phone calls from customers) upon joining the company.

  • We officially turned 9 years old as a company!
  • We were recently featured as the lead story on ABC Nightline:

http://abcnews.go.com/video/playerIndex?id=5328179

Our focus continues to be on building our brand and our culture
around providing the very best customer service and experience.
Our hope is that 10 years from now, people won’t even realize that
we started out selling shoes online. In fact, our business doesn’t
even have to be limited to just the online world.

If we can build Zappos so that our brand is simply about the very
best customer service and the very best customer experience, the
sky’s the limit as to what we can eventually accomplish. Right
now, we are just scratching the surface of what’s possible. In the
ABC Nightline story, there’s even a mention of the possibility of
a Zappos Airlines later down the road:

http://abcnews.go.com/video/playerIndex?id=5328179

Thank you everyone for all of your support and getting us to where
we are today! I’ll be sending out another update after the year is
over, and look forward to reporting on our progress!

——-
Tony Hsieh
CEO – Zappos.com

——-
Our lawyers want us to put in the following disclaimer, so here it
is:

This email contains forward-looking statements that involve risks
and uncertainties, as well as assumptions that, if they ever
materialize or prove incorrect, could cause our results to differ
materially from those expressed or implied by the forward-looking
statements and assumptions. These risks and uncertainties
include, but are not limited to, the risk of economic slowdown,
the risk of over or underbuying, the risk of consumers not
shopping online or at our web site at the rate we expected, the
risk of supplier shortages, the risk of new or growing
competition, the risk of a natural or some other type of disaster
affecting our fulfillment operations or web servers, and the risk
of the world generally coming to an end. All statements other
than statements of historical fact are statements that could be
deemed forward-looking statements, including statements of
expectation or belief; and any statement of assumptions underlying
any of the foregoing. Zappos.com assumes no obligation and does
not intend to update these forward-looking statements.

——-

Comments

467371979's picture
Jan 6, 2010 at 4:51 pm ZC13686 said:

Hello, A little over one year ago I had a comversation with the CEO 0f this company. At the time His major concern was the incredible number of returns on shoes due to improper fit. I'm curious to know if the solution to the problem has been found? If not, I have an ideathat I would like to share. An idea that would change the game for Zappos.com . Thanks

40050853's picture
Jan 6, 2010 at 4:51 pm ZC13847 said:

Just saw that the Nike terra CI women's shoe is $80 on the Nike website and $84 on Zappos - is that to pay for shipping that is listed as n/c? Michele artcricket@gmail.com

465621977's picture
Jan 6, 2010 at 4:51 pm ZC14415 said:

Tony, I enjoyed your forward facing update. I actually have tried to reach you in person. Until March of this year, I owned the real estate company that relocated many of your executives. I have sold my interest in the company and I am bootstrapping another venture which I would like to discuss with you. Please email me a way to contact you directly.

Michael Donovan Guru@ideagroupent.com

467457121's picture
Jan 6, 2010 at 4:51 pm ZC14614 said:

Hi, Tony, I am overwhelmingly impressed with the Zappos.com culture and customer service. Your company is a model for any company that is trying to implement organizational change. As I am sure you are aware companies are always looking for new benefits that are cost effective and that address the needs of work-life issues. We offer an Employee Preparedness Participation Workshop that accomplishes the following: Bridges a gap in Business Continuity Plans, as identified by the Department of Homeland Security; Answers what your employees would personally do in a crisis; Reduces costs associated with absenteeism; Acts as a recruitment tool; and Provides a low-cost sustainable solution

Tony, when you have a few minutes, I would love to discuss this program in more detail with you. Our website is: personalrecoveryconcepts.com and you can reach us at 1-866-528-9186 or via my email address: vicky@personalrecoveryconcepts.com - I will send you my direct cell when you respond. Thanks so much!

467456183's picture
Jan 6, 2010 at 4:51 pm ZC14700 said:

I'm a Zappo's believer - ordered school shoes two days for my son - 13 and hard to please. When they arrived today, two days later, even he was pretty astonished.

Thanks for under-promising and over-delivering!

BW Mpls, MN

467198313's picture
Jan 6, 2010 at 4:51 pm PuglyFeet said:

Those sales figures are impressive (I just read it out loud to my husband) and we think you guys can hit a billion this year with no problem.

467707267's picture
Jan 6, 2010 at 4:51 pm ZC17481 said:

I have never run across a company that made me think to myself "WOW" I want to work with thoes people......I want to be in that parking lot doing the "Core Value" cheer. At one time I worked for Mrs.Fields Cookies. During our interview (usually held in a food court of a mall)I would tell a potential teammate that it was the birthdate of a stranger sitting at a table across from us,then ask them to go sing "Happy Birthday to them" ....the initial reaction and the outcome of the candidate always let me know what kind of personality I was dealing with. If they just stood up and sang thier hearts out to the stranger it was a match!!!!!!! Not sure where your planning to expand or where you might need to put together a GREAT Team....But im here in Florida if your interested in talking more!!

Tell ya what, Im so sure that I would be a perfect match for your team that if you dont work out for me right after training,I'll refund the $ you spent on my training.

Happy birthday to you,Happy birthday to you..........

45147989's picture
Jan 6, 2010 at 4:51 pm ZC18859 said:

Dear Tony,

Have you thought about writing a book? I'm a senior editor at HarperStudio, a new imprint at Harper Collins, and I would love to discuss this if it interests you. Zappos is an incredible success story-

Sincerely, Julia Cheiffetz Julia.Cheiffetz@Harpercollins.com

467964957's picture
Jan 6, 2010 at 4:51 pm ZC20151 said:

Tony,

Just saw you on Oprah and WOW. You are truly an inspiration to all. I am currently unemployed and have spent the last 6 years in and out of horrific culture employers. I have a lot to offer and want in. How do I join the family?

Tony anthonyavino@aol.com

467975975's picture
Jan 6, 2010 at 4:51 pm ZC20294 said:

Tony- CEO- I hope someone reads this and passes it on to you. I am a nurse in NC and I just watched you on the Oprah show and I had to see if I could contact you. Your values about customer service is great! I would love to know if you have ever thought about including HEALTHCARE in the future of Zappo? The reason I ask is because as a nurse I am seeing such a need for customer service but there is such resistence to this from the "business" end of it, being the administration and number crunchers. This is wrong on so many levels but most of all because it is not just the medicine and technology we have to offer but the kind words, extra time to talk to a scared patient/family, and taking care of the healthcare workers that can make the difference in the QUALITY of life as well as the outcome. It is a shame that American healthcare has turned into a business of making money while doing what we CAN instead of what we SHOULD do for people. I do not want to seem like I have some big agenda, I am just a nurse, married mother of 2 special needs boys. I love my job but last year I had to make the heartbreaking decision to leave a hospital I had worked at for 7 years because of how it was being run and how the patients were being treated, as well as the staff. I am at a smaller hospital now that is much more personal and takes the time for customer service and the outcomes are great! There is such a wide open opportunity for improvement that it would be great if a company like yours would think about healthcare. I heard you say that in years to come maybe you would have an airline and other companies-which I think is great. Please consider healthcare. I think the way you run your business is exactly how healthcare should be. Too often the administration and managers who have never put on scrubs, worked a 12 hour shift with limited staff, too many patients and no lunch are the ones telling all of us to do more more more. Take more patients, learn new computer systems in a day, just get it done, too bad if you do not have the time to do it well. Nurses are the most trusted profession in this country, have been for years. That is a lot of pressure. The good ones are so worn out. We cry a lot, usually in the car after work. Usually after we have had a day where our patients did not get the basic human "customer service" and that is not why we became nurses. Doctors are feeling this stress as well. What they have to deal with is unreal. Patients are customers, they deserve good customer service that is a close second to the medical technology we have to offer. Wow-I just rambled on...sorry. I guess this is my passion. I do not usually try to contact people from tv. I am not asking for money. I just hope that you consider Healthcare in the future of your company of customer service. We need it. Thank you for the blog, it is nice to be able to try to reach out. I hope this makes it to you. Congrats on all of your success. I think your vision is great! When your employees are happy and smiling, it speaks volumes about the kind of leadership they have. Maybe someday you can open Zappos Medical Centers or Zappos Customer Service 1st Medicine. Sign me up to work there! Sincerely, K.Campbell

43281720's picture
Jan 6, 2010 at 4:51 pm ZC20382 said:

Tony,

I have been a Zappos customer for some time, but really enjoyed learning more about the companay's history, core values and "passions" as I recently viewed your interview on Oprah. I happen to an Architect with a Design / Build firm here in Kentucky that also enjoy my passion of working with outstanding, unique, earth minded, companies in designing / building their distribution facilitites. I've been fortunate enough to work with Gap, IKEA and many others. Please check out Gray Construction, www.gray.com and let me know if there would ever an opportunity where I could have the chance to work with such a unique business as Zappos.

Sincerely,

Connie Keyser, AIA Senior Design Manager Gray Construction

467996027's picture
Jan 6, 2010 at 4:51 pm ZC20448 said:

Dear Mr. Hsieh, I recently saw your appearance on Oprah. I was blown away with your customer service and the way you are running your company. My name is Katrina Cook and I am currently in the Dominican Republic on a missions trip. I have noticed in the almost two weeks I have been here, there are a lot of people with no shoes! I wanted to know if there is anyway you could donate shoes to this region. Nothing fancy, it's very hot and flip-flops would suffice. Please contact me at kac971@hotmail.com for more information. Gracias!

43181176's picture
Jan 6, 2010 at 4:51 pm ZC2363 said:

Hello K.Campbell,

My name is Liz G., and I work directly with Tony. He wanted to get back to you, but due to his crazy schedule, he thought I would be able to get a response to you sooner than he. At this point, we do not have any plans for Healthcare, but would consider it later down the line. Who knows what Zappos will do in the next few years. We appreciate you taking the time to comment on our blogs! If you are ever in the Las Vegas area, be sure to stop by our offices for a tour.

465621977's picture
Jan 6, 2010 at 4:51 pm ZC14415 said:

Tony,

I'm not sure you remember me, I owned CENTURY 21 MoneyWorld in Las Vegas when you bought your home. Your company has been a proud addition to the Las Vegas community, a city I've called home for over 20 years. I have an interesting story to tell you about how you have played a small part in a remarkable chain of events that spawned an entirely new career for me at age 56. After my second brain surgery in 2006 to remove a large tumor, I realized that I need to make a change in my life. A chance order through Zappos.com ignited a spark that has created three new businesses since July 2007. The rest of the story is too long for a blog. If you'd like to hear the rest, drop me a note.

All the Best,

Michael Donovan MDonovan@GolfNuts.com

466104121's picture
Jan 6, 2010 at 4:51 pm ZC23618 said:

I would just like to say I truly enjoyed working for your company. It was the best job I have ever had. I do have a few questions however in cutting back costs we could have done alot of things instead of laying off employees. We could have stopped getting free lunches, free pop, free vending machines, free happy hours. We could have went without decorating all those conferance rooms in the 2290 building. I think all the employees would rather have seen those things go than their family members. I understand why all of this had to be done. I am still pissed about it, eventually I will get over it but, it just seems like we should have cut back on all our expenses rather than laying off ppl. It must be tough having your job though and I understand. I just wonder why we didn't do all this first

470175509's picture
Jan 6, 2010 at 4:51 pm ZC50092 said:

I actually have tried to reach you in person. Until March of this year, I owned the real estate company that relocated many of your executives. I have sold my interest in the company and I am bootstrapping another venture which I would like to discuss with you. Please email me a way to contact you directly. (+spam+)

470268143's picture
Jan 6, 2010 at 4:51 pm ZC51523 said:

I'm curious as to what the sales figures were in 2008, with the slumping economy and the layoffs you had to make later in the year? http://www.naymz.com/search/john/morgan/2678516

467809239's picture
Jan 6, 2010 at 4:51 pm ZC54648 said:

I am curious to see how fast Zappo will be growing in a couple of years. The numbers are really growing exponentially. (+spam+)

470651824's picture
Jan 6, 2010 at 4:51 pm ZC56995 said:

I think that is a great improvement, Keep on improving guys and Tony great post you write, keep on this as well

(+spam+) (+spam+)

477968364's picture
Mar 17, 2011 at 9:38 am marvenn42922 said:

Wow, That"s good for all, custom logo design . I like it so much .