What’s Your Competitive Advantage? Zappos.com Edition

May 10 2012

A billboard that sat along the 101 Highway in the Bay Area in 2009 put it bluntly: “1,000,000 people overseas can do your job. What makes you so special? For anything desirable, there’s competition. Good entrepreneurs build and brand products that are differentiated from the competition. They are able to answer the question, “Our customers buy from us and not that other company because…”

Zappos.com, the online shoe retailer founded in 1999, has a clear answer to that question: insanely good customer service. While other online shoe stores like shoebuy and onlineshoes.com offered 30-day return windows, Zappos made a name for itself by being the first to offer a 365-day return policy on everything they sold. While retailers like L.L. Bean and J.Crew expected customers to pick up the shipping costs each time they returned something from an online order, Zappos offered free shipping on all returns, no questions asked. And even when giants like The Gap mimicked the free shipping and free returns offer in their online shoe store, they buried a customer service phone number in small print at the bottom of the page. Zappos’ 1-800 number, on the other hand, is displayed “proudly,” in CEO Tony Hsieh’s words, on every single page of its website. Moreover, local employees working at corporate headquarters in Nevada answer every call. There are no scripts and no time limits on such calls—virtually unheard of in the world of quota-driven, outsourced customer service centers. Zappos massively differentiated themselves from its competition by building a culture that is customer-centric in every way imaginable. This is what has made Zappos a trusted destination for millions of loyal online shoppers (and it’s also why it was acquired by Amazon for close to a billion dollars).