I don't really see their ratio being high enough. I'm rooting for them, but I really feel like any day their prices are going to go up to MSRP and they're going straight out of business.
And I'd love to know what % of people take them up on the $1k.
I'd love to know the ratio of returned shoes to ones kept. I bet it's greater than 1:1.
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).
It's not a hassle at all with Zappos, it's trivial. I'm the kind of guy who would just eat the $50-$100 if it required more than 10 minutes of my time. I've got boxes full of crap to prove that.
> I seriously question the economics of Zappos... I really feel like any day their prices are going to go up to MSRP and they're going straight out of business.
>> It's not a hassle at all with Zappos, it's trivial. I'm the kind of guy who would just eat the $50-$100 if it required more than 10 minutes of my time.
Or, another perspective: Imagine you go to a shoe shop, and you try on three or four pairs before you buy. For Zappos, that would be a return rate of 3:1, reduced only by the inconvenience for the customer to return the shoes.
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.