The online shoe and clothing store doesn't spend massive sums creating and implementing online or offline marketing and advertising campaigns, yet it still generates significant buzz among its current and potential customers.
How? Mostly through its heavy use of Twitter Inc.'s eponymous social network and, to a lesser extent, its use of tools from Web 2.0 providers like Facebook Inc.
Of Zappos.com's 1,400 employees, 450 actively use Twitter to promote the company. In fact, CEO Tony Hsieh is the 20th most popular Twitterer, with more than 186,000 followers on the social network, according to Twitterholic.com.
Instead of sending online shoppers coupons or information about sales, executives and employees at Henderson, Nev.-based Zappos.com regularly tweet about what happens to them at the airport, the fact that they eat marshmallows in between phone calls and the state of the economy.
The goal is to respond to customer comments and form personal connections with their Twitter followers, as well as with friends on Facebook, where employees post blogs and videos.
The tweets and posts are a way to give customers and other curious social network members a way to get a glimpse at the inside workings of the company.
"Today, consumers have access to so much information," said Aaron Magness, director of business development at Zappos.com. "You can buy the same shirts at Zappos as at somewhere else. The product almost becomes less important; it becomes about the business."
The privately held retailer claimed more than $1 billion in sales last year, up from $840 million in 2007. In blog posts, Hsieh said the company did cut 8% of its workforce late last year because of the declining economy, but it continues to be profitable nonetheless.
Zappos.com isn't alone in its use of social networks. Companies large and small are increasingly investigating how to best use Web 2.0 tools from the likes of Twitter, Facebook, LinkedIn and YouTube. Analysts note that there's increasing pressure from customers and employees on companies to use social networks.
Potential Risks
Analysts say that, as in the case of Zappos.com, using Web 2.0 tools to boost visibility can be a good thing, but the strategy can also pose risks, especially in a time of layoffs, benefit cutbacks and salary reductions.
For example, an employee, whether she's a CEO or a researcher, could create an online maelstrom with an unintentional slip of the keyboard. And readers of a company's online posts, bolstered by anonymity, could respond to them in a particularly vicious manner.
"It's two-way communication, and you have to be able to take the heat that may come your way," said Dan Olds, an analyst at Gabriel Consulting Group Inc. in Beaverton, Ore. "It isn't for everyone. Some companies will have a hard time dealing with it, while others will thrive."
Olds said that any company using Web 2.0 tools will inevitably face strong, and potentially embarrassing, criticism. "No company is perfect, and some customers will complain about anything," he said. "That's why some companies are still cautious about engaging with social networks."
Olds also noted that it's important for businesses to find the right voice or tone for their social networking personas. For example, Dell Inc. uses sites like Twitter to blast out information about sales and coupons, while Zappos.com is all about letting customers get to know its employees, he said.
"You have to make sure that you're presenting the right image for your company and doing it in the right way," he said. "A whimsical and funny approach will work for Apple and many other companies, but not so well for, say, Dow Chemical. It takes a lot of thought and careful consideration."
Olds also suggested that companies establish a clear goal for their social networking strategies -- and he said they shouldn't expect users to automatically embrace them. "A bank that focuses on its interest-bearing checking accounts will be less interesting than a bank CEO who provides straight talk on the economy. The critical thing is to understand your goals and present an image consistent with your company," he said.
"I see this whole social networking phenomenon not as truly a purely technical phenomenon, but as a change in the values of the organization," said Soumitra Dutta, the Roland Berger Chaired Professor of Business and Technology at INSEAD, an international business school in Fontainebleau, France. (Source: nytimes.com)
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