With the financial, operational, technological and labor pressures in today’s business environment, the attainment of profit maximization objective for many companies is increasingly becoming a challenge for many companies. Nevertheless, many companies are increasingly seeking for ways of reducing costs of operation and increasing the profit margins. Zappos is an online company that specializes in selling assorted goods ranging from clothes to shoes. The company promotes its goods online and delivers them free of charge the same day customers order them. Although this is a great customer service, it increases the company’s operating cost. In addition, to ensure that employees offer quality services to customers, the company invests heavily on employees’ training. This practice too increases its operating costs (Boone, & Kurtz, 2015). This paper evaluates the various ways that the company can utilize to minimize operating cost and still offer quality services to its customers.
Offsetting the cost
To start with, Zappos has alternative ways it can utilize to offset the high cost incurred in employees’ training and free shipping exercise. The first area that should be targeted is warehousing. The company should try as much as possible to minimize its warehousing cost by ensuring that its premises are located in good buildings, but cheap ones in terms of cost. This means that the company should look for warehouses whose rents are low. If this is done, it would reduce the cost significantly. The second area to target would be the shipping area. With regard to this area, the company should look for a convenient shipping company that charges the lowest rates, but offers efficient shipping services. The third area the company can target is the cost of its products (Lamb, Hair, & McDaniel, 2013). If the company procures its products from certain manufactures, then the company should try to obtain these products at the lowest prices. If the company produces these products or some of them, it should as well minimize their cost of production. This would cut the production cost thereby help in recovering the expenses the company incurs as it offers free shipping and training its employees.
Off-shoring call center
By practice, an off-shoring exercise is aimed at reducing cost either by relocating offices or services to a cheaper place (Pride, 2012). Consequently, if Zappos is to off-shore its customer call centers to other states or regions then it would reduce its operating cost significantly. Indeed, Zappos should consider off shoring its customer call centers if it aims at reducing cost so that it can continue offering great customer services as it has been doing.
Nonetheless, the company should be careful when implementing this strategy. In particular, the company should start by evaluating the consequences of doing so because the exercise may have negative repercussions. For example, the exercise might affect the quality of services the company offers to the customers because there might be miscommunication between the warehouses and the customer care unit. This means that the customer care unit might give wrong information relating to the items in stock. This would automatically affect the good customer services the company offers to its customers. For this reason, the company should start by looking at such challenges and developing ways of dealing with them. A lack of analysis may end up ruining the company’s good customer services (Boone, & Kurtz, 2015).
Enhancing customer service
Apart from minimizing cost, the company can also focus its attention on creating long lasting relationships with its customers so that these customers can be loyal to the company. This means that the company should work towards ensuring that customers do not shop once from its website and never shop again for one reason or the other. On the contrary, the company should ensure that as it strives to get more customers, its existing customers do not go away, but they become loyal customers. For this reason, the company should offer customer-oriented services. These services focus their attention on meeting the customers’ needs rather than simply offering services for the sake of offering them.
They also focus on ensuring that customers get value for their money by ensuring that they get what they pay for. In this regard, the company should ensure that customers get the products they pay for and when dissatisfied with those products, the company should change those products rather than argue with customers (Lamb, Hair, & McDaniel, 2013). This means that the company should learn to treat its customers nicely and offer them personalized services. In simple terms, this means that the company should deal with the challenges that customers identify during the shopping process as soon as possible. For example, when customers complain about something, the company should look at the complaint, deal with the complaint and assure its customers that it has dealt with that complaint. From another perspective, the company should not ignore customers’ complaints (Pride, 2012). Instead, it should device ways of dealing with those challenges rather than ignoring them.
Boone, L., & Kurtz, D. (2015). Contemporary marketing. Mason, OH: Cengage Learning.
Lamb, C., Hair, J., & McDaniel, C. (2013). Marketing. Mason, OH: South-Western/Cengage Learning.
Pride, W. (2013). Marketing 2014 + Marketing Coursemate With EBook Printed Access Card (17th ed). Boston, MA: Cengage Learning.