Why Zappos Pays New Employees to Quit—And You Should Too

Plus they're probably running Bayesian statistics on all the data they have on the interview/test results of the candidates, so they can get better on hiring those that are less likely to quit. (And if they're not, they should be.)

You'd be surprised though at how much cash people are willing to sacrifice just to be able to enjoy coming to work each day.

As long as they're ballpark, they'll always have people beating down their door.

The prices at Zappos are very close to MSRP... at least for current sneakers. I've been tangentially involved with the action sports industry for years. My friends own shops and apparel companies and I've done web and video work for them. Zappos gets stuff for lower cost than the shops because they do so much volume. They also cut out the distributor and don't have to pay for retail space, which are the two points where other retailers lose. Even with returns they are making a killing. An $80 sneaker probably only costs them $20.

They probably did eat a bit on that, however:

1) Most customer's don't return stuff anywhere close to the rate you do (they usually get it right the first time. It's also a hassle to return stuff, even if it's free).

2) I can imagine with your atrocious rate ratio of returns, you'd be far more inclined to pay a few more dollars to make that experience better via Zappos then stinge out and deal with paying for the return shipping and poor customer service issues elsewhere. (i.e. if they raise their prices, who cares? Everyone knows Zappos was built on their excellent customer service and selection, not their prices)

(Note: I personally haven't used Zappos myself, but I've heard Tony talk about his customer service oriented culture in person and they sure seem to be doing just fine with it).

For people who love to shop for shoes, all they need is one experience with Zappos and they never want to shop anywhere again. That's worth the price of some return labels.

Article says 10% take the money and run.

"I seriously question the economics of Zappos"

This is a pure numbers game. They know long before you do what percentage of orders will be returned. I imagine they stay competitive in such a touch market because of their economies of scale.

you should ask tony...he'll probably answer you

If I were a people person, Southwest would be the company I would work for. I love their reality show because it shows you how people can remain calm in a storm.

Nordstrom's is a department store known around here for extraordinary customer service. I walked into a Nordstrom's the other day. I felt out of place because the marble floors reflected the well-heeled patrons. I went in just to see if it was true that they never ask "Can I help you?". Because if you are asked that - you'll probably say "No, thank you." At Nordstrom's, they asked me "Have you shopped here before?" It's a tricky question - because it's not really a closed-ended question. "No" "No? How can I.."

I think they think about this the same way they think about their returns policy: They just assume that most people will be reasonable, and not go out of their way to abuse the system.

On a tangential note, I seem to notice more and more how this pattern of just trusting people seems to win out in all kinds of fields, even though it seems non-intuitive. Wikipedia is another example and in a sense the whole open source phenomenon is based on this. Both of these would have been considered preposterous until they succeeded and completely changed the world.

That's what I thought. Either they do not care, have a back-up plan or they had hoped to rely on security by obscurity.

Incidentally I just read "Built To Last" and they also talk about tightness of (cultural) fit.

Hopefully those kind of people will be caught by the interview process, but I'm sure they slip through the cracks every once in awhile. In that case, they eat $1000. Oh well... it would appear that most people are honest enough that it doesn't happen very often, and doesn't make much of a difference to their overall business.