Blog 184 talked about when when Zappos moves to 1000 Van Ness. In this blog I want to talk about  when Zappos provides its own selection.

Zappos had a few different models going on at this point in their history. There was the drop ship model where the customers would order the items and pay for it on Zappos then the vendor would ship to the customer. This way Zappos didn’t have to carry the inventory which would reduce markdowns.

The second way was carrying inventory in the new warehouse above the office and Zappos would ship the orders. This model gave full control over the customer experience aside from missing sizes if the vendor was out of stock. The risk in this model was markdowns at the end of the season. If you had too much excess at the end it could be costly.

Finally, third was the outside retailers providing more selection to put on the site but Zappos would buy from the retailers and send to the customers, the profit in this model wasn’t all that great for Zappos. The good thing in this model was providing more selection. At this point though Zappos was carrying over 30 million pairs so it decided to drop this third model and carry its own selection.

Zappos retail Store

Tony decides to acquire Robert’s & Elliot shoe store in Willows, CA. Some of the vendors were funny about the on-line business but if you had a retail store it was ok. So Zappos opened a retail store there. Across the street from the new retail location was a 30,000 sq. foot warehouse so the warehouse operation was moved there.

With carrying its own selection and controlling the customer experience more, the sales were starting to sky rocket. On November 26, 2001 Zappos reached a record 1 million dollars in sales for the month.

Site update

The site itself was revamped again adding a Men’s & Women’s section by style. The site also offered a 60 day return policy and free shipping and returns. There were also additional search selections by Men and Women options.

By the end of the year Zappos reached 8.6 million in Sales which crushed the previous year.