Analytics: How Does The World's Largest Online Shoe Retailer Win?

Case Study

Zappos

Company profile

Zappos.com is an online service company that sells shoes, clothing, and more. The brand is currently housed in Las Vegas, NV. The company offers over 150,000 products and is breaking into the fashion market, offering the same service and convenience it does with shoes. Between April and July of 2013, Zappos generated a revenue of over $700 million (Lewis, 2013).

§ Founded in 1999, the company was acquired by Amazon in 2009

§  Zappos products and services consist of shoes, clothing, and accessories

§ Shoe sales account for 80% of revenue

§ Clothing, handbags, watches, and eyewear account for 20% of revenue

Goal

To track and monitor e-commerce traffic, sales, and consumer behavior to analyze the collected data, resulting in appropriated actions to achieve overall success of the company.

Situation

It is important to note that since its founding in 1999, Zappos has never taken a traditional approach in marketing and promotions; rather, the company has relied on experimentation to achieve success. Zappos focused on making consumer shopping on the site a positive experience to turn consumers into loyal customers resulting in return customers. Zappos cautiously monitors the behavior of its visitors to understand if any changes are needed to make the site more user-friendly. Since its founding, Zappos has gone on to become the world’s largest online shoe retailer and as a result, the company has set analytic tools in place to monitor traffic. It is vital that the brand is conscious about creating resources to analyze important information and data that the company can use to measure and continue its success.

 

Since Zappos.com is one of the largest online retailers on the web, it is very beneficial for the company to use analytic tools to monitor visitor traffic and customers. The company thrives off of its online community, blog sites, social media pages and more. To monitor e-commerce business, Zappos is using a combination of Google Analytics and in-house software analytics to monitor visitor traffic and customers. According to the Zappos.com website, the brand’s analytic data is analyzed by members of its marketing team. “Through Google Analytics Zappos is able to track customer interactions by analyzing which articles customers are visiting most frequently, bounce rates, time on site, visitor loyalty and outcomes. Outcomes can really be whatever Zappos has determined to be a valuable goal for their business, but from an analyst’s point of view it would appear to be a blog subscription or a purchase at the very minimum” (Johnson, 2013).

 

On the main e-commerce site, Zappos monitors consumer engagement, consumer behavior, traffic, keyword searches, and conversions. Monitoring the data collected revealed that over 75% of Zappos’ business comes from repeat customers (Quesenberry, 2010). Monitoring this data can assist Zappos in determining any problems or issues that the site may be having or is causing them to lose sales and can also assist in implementing forms of action to fix the items in a timely manner.

 

Goal Achievement

Zappos uses Google Analytics to track and monitor traffic and sales generated by each keyword, letting them know which terms are working and which need to be changed. Zappos can use Google Analytics in addition to their in-house analytics to compare analytic data to show any trends worth pursuing and choosing what data needs to be a priority in order to improve search engine optimization. 

According to the Director of Direct and Online Marketing for the company, Darren Shamo, Zappos monitors data collected on what customers are looking at while on the e-commerce site, and uses the collected information to create customized advertising that the company believes the customer will deem useful. Shamo states that in order for the brand to avoid being viewed as “creepy” an ad will never feature the exact product a customer was viewing on the site (Demery, 2012). Instead, it will take the analytics data it collects on what customers view the Zappos.com website and “dumb it down” through its product recommendation engine to pitch ads for a range of merchandise a consumer is likely to purchase. “A shopper who showed a clear preference for a pair of Nike “Free Run+ 3” running shoes in gray and red trim, for instance, may see a retargeted ad for several similar products in multiple brands and styles—but not the exact same Nike shoe she had checked out on Zappos—while later visiting another web site” (Demery, 2012).

“Showing people exactly what they had seen, and producing more targeted ad content always converts better... [b]ut we back away from the revenue opportunity for the sole purpose of improving the customer experience. We feel that, long term, we’ll get more customers and more sales” (Demery, 2012).

 

Benefits

Utilizing analytic tools allow Zappos to view all metrics that are relevant to the online store and all web traffic generated. A few examples of the metrics that are measured are:

·         Ecommerce Conversions to check conversion rates for each product

·         Engaged Visitors to understand why visitors are on the Zappos site

·         Readers to configure the amount of users that are visiting more than one page

·         Calls to Action to determine how many calls to action Zappos shoppers complete

·         Bounce Rate to determine how many viewers are visiting the site without taking time to view more than one page

 

Zappos collects the information from Google Analytics and its in-house web analytics tools to ensure that the data collected is accurate, timely, and precise. Using several analytics tools to gain insight increases the company’s probability of interpreting the data correctly to make the appropriate decisions. For instance, if Google Analytics reported that the company’s sales increased by 20%, Kissmetrics reported sales increased by 25% and Clicky reported sales increased by 30% then the company can ensure that sales have increased by an amount greater than 20%.

Technical Skills

Zappos is not shy about what it looks for in its employees. The company publicly lists the desired skills potential employees should have in order to perform analytic job functions successfully. Zappos states Marketing Analytics should “... serve as a support function to all marketing channels to validate and certify all data sources. We also like to get our hands dirty by running complex analysis and set channel targets required to balance the media mix. Desired skills: analytics, Microsoft Excel, SAS, R, SQL” (Zappos, n.d.).

 

Results

Zappos has delicately created a balance to provide customer satisfaction without compromising sales and merchandise. Zappos’ mission to deliver WOW service is productive as a result of carefully monitoring its analytics and using the information to make positive changes that will continue to attract and appeal to the brand’s customers and create a loyal, returning customer base.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

 

Demery, Paul. (2012). How Zappos balances privacy and targeted ads. Retrieved on February 23, 2014 from http://www.internetretailer.com/2012/10/19/how-zappos-balances-privacy-and-targeted-ads

 

Johnson, E. (2013, December 9). Zappos uses web analytics to fuel the marketing engine. Retrieved from http://analyticsinsight.blogspot.com/2013/12/zappos-uses-web-analytics-to-fuel.html

Lewis, S. (2013, August 20). Can zappos bulldoze the brick-and-mortar shopping model? Retrieved from http://www.retailsolutionsonline.com/doc/can-zappos-bulldoze-the-brick-and-mortar-shopping-model-0001

 

Quesenberry, Keith A. (2010). Walk a mile in zappos’ new media shoes. Retrieved from http://addingtonoise.wordpress.com/2010/03/23/walk-a-mile-in-zappos-new-media-shoes/

 

Zappos. (n.d.). Zappos marketing analytics. Retrieved 2014, November 12 from https://jobs.zappos.com/careers/marketing

 

 

Is Google Watching You?

 

 

 

 

According to our lesson this week, Google owns...

·         The top-ranked search portal

·         A wildly popular e-mail service

·         A widely-used customizable home page

·         A leading feed reader

·         The top-ranked feed management system

·         The top-ranked analytics product

·         The largest distributed ad network

·         The most widely-distributed traffic monitoring toolbar

·         The largest video content hosting site (Reed College of Media, 2014).

How do you feel about the fact that Google collects data from millions of its accounts every day? Should a user have any concerns about this or is it just the price we have to pay to reap the benefits of Google's many (mostly free) services? Research Google in the news with regards to topics related to ethics, privacy and security and share your findings along with your perspectives.

Have you ever sat back and wondered exactly how much data Google collects every day? How does this affect you? In 2012, Google replaced more than 60 privacy guidelines that governed its products and services with one single policy; it also consolidated the personal data it collects. “The company creates as much data in two days — roughly 5 exabytes — as the world produced from the dawn of humanity until 2003... [according to] Eric Schmidt, the company’s chairman” (Harbour, 2012). Google uses a massive amount of information that it collects from its search engine to assist companies in placing advertising on the web and providing free search engine services to the public. However, the benefits of Google have come with a wide range of privacy issues that are still in effect today. Here’s a few concerns about Google and privacy:

Google using unsecured Wi-Fi networks, Wiretapping, and a string of lawsuits

Google began using Street View cars to assist Google Maps in providing accurate pictures and information for Google users. Google Street View is featured in Google Maps and Google Earth that provides panoramic views from positions along many city and rural streets around the world. It was first launched in 2007 in several cities in the United States, and has since expanded. Most of the captured photography is done by Google Street View cars. The issue with this feature is Google obtained information from unsecured WIFI networks that included information such as personal emails, passwords, URLs, personal data, and more. In 2013, the company dealt with a lawsuit filed by 38 states that suggested Google violated people’s privacy during the capturing of street views. In agreeing to settle a case brought by 38 states involving the project, the search company for the first time is required to aggressively police its own employees on privacy issues and to explicitly tell the public how to fend off privacy violations like this one. David Streitfeld of the New York Times wrote in 2013:

While the settlement also included a tiny — for Google — fine of $7 million,   privacy advocates and Google critics characterized the overall agreement  as a breakthrough for a company they say has become a serial violator of privacy. Complaints have led to multiple enforcement actions in recent    years and a spate of worldwide investigations into the way the mapping  project also collected the personal data of private computer users.

 

The settlement paved the way for a string of privacy battles that the company would have within the next year; one being over Google Glass, the heavily promoted computer that is considered wearable in the form of glasses. “If you use Google Glass to record a couple whispering to each other in Starbucks, have you violated their privacy?...Well, 38 states just said they have a problem with the unauthorized collection of people’s data” (Streitfeld, 2013).

Since Google’s lawsuit, the company’s data collection methods continue to raise privacy concerns. The company collects user data through its search engine, social network, Google+, Gmail, and Android software for mobile devices. Google was recently under fire for violation of a wiretap law, claiming to have a loophole in its privacy policies that allowed the company to read and share email contents without legal consequence. Google has also recently caught a string of class-action lawsuits claiming the company stores and reads emails from more than 400 million Gmail users.

“Google said its Wi-Fi tapping is legal because it doesn’t collect “auditory broadcasts,” or radio transmissions, and only uses publicly accessible connections. Because they’re not password-protected, Google said “the information transmitted across the network may be acquired by the public...the appeals court said that’s only partly true, in its decision. Getting private data like emails and documents over an open Wi-Fi connection has some degree of difficulty and “requires sophisticated hardware and software” (Williams, 2014).

Ethically speaking, it is difficult to determine if users should be concerned about privacy violations or if users should accept that the powerful company collects data while providing free services. For instance, the public could argue that the data collected from the Street View cars violated privacy and was unethically correct. Though this is true, Google can argue that the company ceased the collection of data once the issue was brought to its attention and that Google wasn't intentionally collecting unsecured data, but it was a mishap due to the method the program was written. The company can also argue that it has not used any of the data and the information collected was deleted.

Users can also argue that Google is now much more than a simple search engine; it's also Gmail, Google Docs, Google Maps, Google Earth, and even has influence in services such as YouTube and Blogger. The many Google products are able to store data on all users. For instance, users on YouTube receive a list of personalized recommendations after watching several videos. Google has to track what users are watching to craft video suggestions. The company also has access to documents created under Google Docs and Gmail, making it easy to create an entire portfolio of data on one single user. IP addresses are also collected. Google could counteract this unethical violation by explaining that targeted services on sites such as YouTube are convenient for users and are valued. Also, there is no hard evidence that Google collects and stores information against each user. Users also have the choice whether or not to sign in to YouTube so Google is not always able to track or provide targeted services.

All in all, there is no true answer as to whether or not Google steps out of bounds and into privacy violations based on the amount of sharing users are agreeing to in the Terms and Conditions of each product. We, as users, should understand the amount of sharing we are enabling companies and applications to collect and if we feel it is unethical or goes overboard, it is our right and position to cancel all services we are uncomfortable with. What are your thoughts on Google and the recent privacy concerns that follow the company?

 

 

 

 

 

 

 

 

 

 

References

Harbour, P. (2012, December 18). The emperor of all identities. Retrieved from http://www.nytimes.com/2012/12/19/opinion/why-google-has-too-much-power-over-your-private-life.html

Reed College of Media. (2014). Lesson 6. Retrieved from https://ecampus.wvu.edu

Streitfeld, D. (2013, March 12). Google concedes that drive-by prying violated privacy. Retrieved from http://www.nytimes.com/2013/03/13/technology/google-pays-fine-over-street-view-privacy-breach.html?pagewanted=all

Williams, L. (2014, April 3). Google wants the supreme court to legalize collecting private data. Retrieved from http://thinkprogress.org/justice/2014/04/03/3422086/google-wiretapping/