This is the detailed PESTEL Analysis of Zappos of discover how political, economic, sociocultural, technological, environmental, and legal factors can influence the company’s operations and strategy.
Zappos Background and Introduction
Zappos is an American online retailer that specializes in selling shoes, clothing, and accessories. The company was founded in 1999 by entrepreneur Nick Swinmurn, who was frustrated with not being able to find the right pair of shoes at a local mall. He realized that the internet could offer a wider selection of shoes and created Zappos to fill this gap in the market.
Zappos began as a shoe store, but quickly expanded its product offerings to include clothing, bags, and accessories. The company’s mission is to provide the best possible customer service, and it has become known for its outstanding customer experience. Zappos offers free shipping and returns, a 365-day return policy, and 24/7 customer service.
In 2009, Zappos was acquired by Amazon.com for $1.2 billion, but it continues to operate as a separate subsidiary with its own corporate culture and values. The company is headquartered in Las Vegas, Nevada, and employs over 1,500 people.
Political Factors
It is important for organizations to take in to considerations the political factors of a country before entering a new market. Political situation if not stable can play havoc with the companies and lead them towards immense losses and closures overnight. It is imperative to understand that government policies of a country, directly or indirectly derives a business. Tax policies of the government are directly related to the fluctuations in profits of firms, therefore these also formulate an important part of the political domain (Allen, 2001).
Zappos being a brand in the shoe industry and comes under fashion brands must consider the political situation of the market before they touch fresh markets in order to increase organizations market share. Zappos will have to pay a cooperate tax to the government; therefore, the company must be well aware of the taxation system. The management must analyze the current political situation in order to forecast the future situation this will aid in avoiding any unnecessary closure of the company. Another important factor that may be of help for Zappos, as an organization is to keep track of the employee’s rights (Allen, 2001).
Economic Factors
Economic conditions are the major factor that any organization belonging to any industry must consider before entering the market. Economic factors give an insight in to the inflationary fluctuations along with the living standards of a country. Economic factors of a country help organizations to evaluate the unemployment, GDP and inflation levels of an economy. This aid firms to draw their sales forecast. Furthermore, the variable of disposable income of consumers is also important as an economic indicator of financial stability, which affects the company’s profitability. It also sheds light upon the kind of population an organization can cater. For instance a an increasing birth rates may indicate that more of baby shoes need to be produced, whereas, a decrease in death rate may signify that Zappos will have to produce shoes and clothes for older population.
It will be helpful for Zappos to access the information pertaining to spending patterns of the population; this will give an insight to the decision makers about the kind of audience they are targeting and whether the target market will be able to afford their price ranges. Moreover, interest rates and other financial factors will help Zappos to evaluate company records and devise a suitable strategy.
Social Factors
Social factors are of immense importance when organizations need to analyze the existing trends in the market. It is important to keep pace with the changing tastes and trends of population in order to maintain a healthy competition in the market (Henry, 2008). Moreover, organizations like Zappos that are catering to the fashion industry should be more open to the changing trends in the market. It is important for Zappos to know for instance which colors might be dominant in the market and work towards production of those colors and styles.
Furthermore, it is also important for organizations to keep their employees well motivated and to exert leadership styles that welcome more ideas in to the business. Organizations with attitudes like these encourage their employees. If Zappos, as an organization encourage employees to let the ideas flow in to the business; this will increase the level of creativity, thus gaining an increase in sales and profitability.
Technological Factors
The world has become technologically strong; and is further improving on technology on yearly bases. Technology has introduced newer and innovative ways of producing goods, as well as virtual presence around the world. Online shopping has encouraged customers to avail the benefit to stay home and yet be able to shop, giving them a completely new experience (Worstall, 2015). With the wake of newer technology into the business world, the technology based dynamics of the market has made industries more efficient and quality oriented as well.
Technology has also helped businesses to stay ahead of their competitors. For brands like Zappos it is important to own updated technology to not only maintain competition but also to uphold the quality of the products. Zappos as a brand has been able to create a strong presence in the online domain as evident from zappos.com. The company has also been able to use social media tools in an effective manner. Having a presence on social media keeps an organization more connected to the consumer and allow the company to maintain positive interaction with the target marker as well as gain direct feedback from customers.
Legal Factors
Legal factors are fundamental fraction of any organization. The organizations must fulfill the legal obligations along with the maintaining the records of profits and costs. Legal paper work is a necessity to maintain an image in the market. Brands like Zappos who are well known in the market have a reputation to maintain with the customer, therefore, they accomplish all the legal necessities and paper work. In today’s world consumers have become exposed to broader look to life, therefore, while choosing products consumers prefer products like Zappos who are fulfilling their role towards society. Zappos as a brand should find out the legal rules and try to accomplish all the legalities in order to maintain an image as an international brand ( Lesley & Margaret, 2005).
Environmental Factors
Customers have become more aware of concepts of “socially accepted” and “environment”, therefore, they choose products that are not harmful to the environment. It is important to mention here that the consumer through boycotts may, immediately discourage products violating any environmental safety (Kennell, 2015). Thus, every firm must focus on the material that is being used to produce products. The management in stores must follow strict rules to avoid any waste material or by product.
Zappos can also issue a yearly report stating that no animals or any kind non environment friendly material was used to produce products. Zappos can also connect themselves with environment encouraging activities in to make their place in the international market and be accepted by the consumer. It should also be the top priority for the business to be familiar with waste disposal laws (Lesley & Margaret, 2005).
References
Allen, M. (2001). Analysing the Organisational Environment. USA: Select Knowledge Limited.
Henry, A. (2008). Understanding strategic management. USA: Oxford University Press.
Kennell, B. (2015, September 10). Environmental Concern Empowers the People. Huffington Post. Retrieved from http://www.huffingtonpost.com/brian-kennell/environmental-concern-emp_b_8105580.html
Lesley P, & Margaret .S.H. (2005). Strategic Management. USA: Select Knowledge Limited.
Worstall, T. (2015, January 4). The Shopping Malls Really Are Being Killed By Online Shopping. Forbes. Retrieved from http://www.forbes.com/sites/timworstall/2015/01/04/the-shopping-malls-really-are-being-killed-by-online-shopping/#5de39b70183e