Ask Zappos CEO Tony Hsieh, who pioneered the free two-way shipping concept that now is the industry norm, about where retail is going next, he refers you to other company executives to talk about those things.
It’s not because he’s tuned out. Rather, Hsieh’s vision for Zappos goes way beyond ecommerce.
“What’s important to me is Zappos is about the very best customer service and customer experience,” the 43-year-old Hsieh said in an interview at the trailer park in downtown Las Vegas where he lives amidst Airstream trailers and wandering alpacas.
“One day there could be a Zappos airline, a Zappos hotel, Zappos anything. We can have hundreds or thousands of businesses one day. If there’s an opportunity for us to make a difference in terms of better customer service and better customer experience, those are the businesses that we would be considering getting into.”
Zappos, which Amazon bought in 2009 but left Hsieh to run independently, has often been noted for its customer service. Zappos consistently makes StellaService’s list of retailers with best service. (For example, Zappos has a 365-day free return policy). On Apple’s app store, Zappos has an average five star rating. The app store’s editors said it’s their top recommendation for shoe shopping.
Even as online clothing and shoe selling has become a crowded field, with brick-and-mortar retailers better integrating their online and in-store efforts, Hitwise data showed that Zappos overall still ranks as the No. 4 most-visited site among apparel and accessories retailers, after just Old Navy, Victoria’s Secret and Forever 21, all of which have physical stores.
So how is Hsieh planning to achieve his grand vision? A big part of his strategy involves Zappos’s controversial foray into what’s called holacracy structure in 2014.
We are “transforming Zappos from your typical top down hierarchical corporate structure to where Zappos is organized more like a city and less like a big corporation,” said Hsieh, who also wrote the book “Delivering Happiness” about why a company with a different culture and sense of purpose and happier employees can translate to happier customers and bottom line. “One of the things I’ve noticed is when you have 1,500 employees, it’s just a lot harder to move quickly compared to when you have 10 employees. What we are doing is working on all the structures where we can move just as fast or faster than when we were really small.”
Hsieh compared the effort to opening a single bakery in the middle of a big city. “Even though the city might have millions of people, a bakery can still make its own decisions. The mayor of the city doesn’t tell its residents what to do and where to live and which business to open. It’s really this concept of self organization and self management that all startups have when they are small and, over time, slowly lose it,” said Hsieh.
Zappos now is divided into 500 teams, or what it calls circles internally. Employees can belong to multiple teams, each of which Hsieh said is the equivalent of a startup and is free to be entrepreneurial.Every employee is empowered to do anything.
“There’ll just be a lot more innovation,” said Hsieh. “For any company, employees have so many amazing ideas, so much creativity and so many skills that are beyond their specific job description….You don’t have to go up the whole approval chain. Every employee is empowered to do anything. It’s about being able to do a lot more experiments and iterate very quickly.
“The whole goal of what I’m working on is ‘How do we create the platform so any employee can come up with an idea?’ If someone wants to start a Zappos bakery or a Zappos airline, they could. It’s not me saying, ‘Here’s what I think we should do in ecommerce or Zappos hotel.’”