Presentatie van Aki Iida, Zappos

Op What’s Going on in (R)etailing?! 2014 sprak Aki Iida, Head of Mobile van Amazon’s Zappos over het succes van de mobiele strategie van Zappos. Hoe je een mobiele strategie implementeert en in lijn brengt met de marketingstrategie.

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Bekijk hieronder zijn presentatie, voor een volledige ervaring download hier de sheets die Aki Iida gebruikte.

My name is Aki and I am the head of Mobile at Zappos.com. How many people here are not familiar with Zappos.com, please raise your hands. This is great. I live in the United States and I do all these talks. It’s a weird experience for me when I go out there and say: ‘how many people here know of Zappos.com’, because I’ve been with the company for a very long time. When I started working at Zappos, I would tell people: ‘I work for this company called Zappos’. ‘What the heck is that?’ In my mind I have that something for so long. I always thought that I was working for this company that nobody would ever hear about. Nowadays when I go out there and I go to these conferences and ask people: ‘how many people here know of Zappos.com’ and everybody raises their hands, this is great, so I can get to talk a little bit about Zappos.

Zappos was founded in San Francisco in 1999 by a gentleman called Nick Swinmurn. He discovered the fact that buying shoes for himself online was particularly difficult. He was shocked about that fact. What he decided to do is start an online website that sold shoes. The operation back then was so small that he was able to get people from the office, go down the street, go to Macy’s or whatever and buy these shoes that we were shipping out to customers. There was a problem that people were having. People all over the United States didn’t have access to all the retailers that are available in the big cities. Nick came up with this concept, he was sending people over from the office to buy a product and send it to customers. Obviously that wasn’t going to scale, so the big plan was to develop a drop shipping system which we could put in place. By 2001 the company did $ 1.6 million dollars in sales and that was great, we continued to grow, but by 2003 we abandoned this drop shipping business.

The concept behind drop shipping was that we would have a website, people would come in, place an order and then we would send the order to the brands and the brands would then fulfil the order for us. The idea was we didn’t have to manage a warehouse, we didn’t have to worry about maintaining the products, shipping it out. The brands were going to take care of all of that. All we needed to do was call the technology, take the orders, send the orders to the brand and just continue to take orders. What we found was that when we were taking all these orders from customers on their website, the brands were not fulfilling all of these orders right away. If you are a big brand and you get a couple of orders from some person, you’re not going to make that your first priority. As a brand you’re shipping products to all these big retailers as well. If you’re doing business with Macy’s etc., you’re going to probably fulfil these orders first and then get to the couple of orders that Zappos was sending over. For us as a company that created a problem, because our customers weren’t happy, because coming in placing an order, they weren’t getting it right away.

Another problem that we found was the fact that all of these brands had to keep their inventory levels and all the information up to date on their systems for us to know what was available. All of these brands weren’t particularly careful about telling all this information. So people would come in, place an order and a week later we would get the brand telling us: ‘sorry, we don’t have that product’. Then we would have to tell our customers; ‘sorry, you placed this order a week ago, but we don’t have it’. It was a terrible customers experience, so it’s really a miracle that we made like $1.6 million in 2001.

At the end of  2002 our CEO Tony Hsieh said: ‘for Christmas let’s not do any drop shipping’. At 2002 we  started carrying other inventory in the house and selling it out, out of necessity really, because some brands would not let us drop ship. They were forcing us to carrying inventory ourselves, so we started to develop a little bit of that business. Tony said: ‘let’s for Christmas shut down all drop ship, let’s ship all the inventory in house, so that we don’t disappoint customers. Let’s make sure that when people come and do their Christmas shopping, they’re not going to go home empty-handed’.  That was crazy talk for us, because drop ship was such a big part of our business.  But we did it and our customers were so happy that they were getting all their products.

After the holiday season was over Tony came back and said: ‘we’re going to carry inventory’. So we developed our own warehouse which to me was really insane, because when we started working at Zappos we sold on this idea that the company was going to be doing drop shipping and that’s all we were ever going to do. The reason why we were going to make money is because we were not going to carry inventory, we were not going to develop a warehouse, we were not going to ship products. Now at the end of 2002 he was saying: ‘we are going to carry inventory, we’re going to ship products, we’re going to build a warehouse’. I personally was involved in building the receiving, picking, shipping, put away, being shipped out to Kentucky and working out there for a about a year, things that I never thought I could do. Thanks to that by 2004 we had $182 million in sales, by 2008 we had $ 1 billion in sales and 2009 we were acquired by Amazon. That’s a little bit about the Zappos story.

About the company, Zappos is a little bit of a wacky place to work at. We make it our goal to deliver happiness, that’s the big goal that Tony had. What does that mean? To us it means making sure that we go above and beyond for our customers. It has taken long phone calls from our customers, having a long conversation is not seen as a bad thing. In fact Zappos is known for that going above and beyond thing that we have our longest call on record is 10 hours and 29 minutes. It’s a little crazy, but we don’t go to the customer service: ‘what were you doing, that’s crazy, you’re not supposed to do that’. Instead we want to find out: ‘what did you do to keep that customer engaged for so long, where were you guys talking about’. We proud ourselves in building that personal emotional connection, PC is what we call it, making sure that when we talk to our customer, that we get to know them, that they get to know us. That sort of brand loyalty is what we are very well known for.

Another thing that Zappos is known for as well is during the holiday time we have this program called the Holiday Helper. Everybody in the company, including myself, we have to take calls from customers at least 10 hours during the holiday season. Talk to customers, take orders, deal with the problems. Every year I get a little bit nervous right before I take my very first call. I sit down, I put my headphone on like: o god, I have to take a customer order, how is this going to go, but by the end I end up loving it. Every time it’s just a really good experience and that’s because the goal of any person taking calls from our customers is to make sure that we satisfy whatever need they have and to create that personal emotion connection. I talked to a lady that made me talk to her parrot for 5 minutes just because.

I was here to talk about a little bit of mobile, just because that’s our new frontier. I have a few metrics to show you. Over 58% of all American adults own a smartphone. Over 63% of them use their phones to go online. An average smartphone user takes their phone 150 times a day. You don’t really think about this, but when it all comes to us to sink in, these are pretty significant changes in the way that everybody goes about their lives. Within 50 minutes of waking up, 4 out of 5 smartphone users checks their phone. Before we had smartphones, we didn’t have this behaviour. Now it’s almost like instinctual, you wake up, reach out for your phone, whether it is to turn out your alarm or actually go to social media and check out what your friends were doing last night or check out your e-mail to see what’s going on at work. Our lives have changed quite dramatically and it is because of these devices.

Smartphones owners between the age of 18 and 24 on average send 60 text messages a day and that may not be just text messages, that could be through whatsapp, kick messenger etc. On average smartphones users spend about 34 hours a month browsing the web and supposed to 27 hours a months on a PC. For the first time in the United States we see that people are actually browsing the web more often on their mobile devices than on desktops or laptops.

For us the release of the iPhone in 2008, we didn’t necessarily jump on it and thought: this is an extra tier, we’ve got to be ahead, we’ve got to do something about this. We thought: that’s a new gadget, may be something interesting, but not particularly the web of the future. Some people are carrying these phones that have browsers with them, awesome.

In 2009 we were developing our front infrastructure a little bit more and we were experimenting with different lay-outs. We developed it by changing the sub domains instead of having something like Clarks, that Zaffos.com will create a Clarks specific brand website. When we were doing that, some of our geeky developers decided to just go ahead and create an iPhone specific website and he said: ‘if we can do that for any particular sub domain, can we build one for the iPhone’. We went ahead, we built it. There was not a lot of engagement or attraction necessarily there when we built it and we started to track the activity.

I think that the really official Zappos strategy started in 2010 with the release of the iPad. We started to see whether there would be any engagement in apps, would customers be interested in downloading a Zappos iPad app and using it. We went down that path to develop that Zappos app and customers were using that and loving it. In 2011 we released an iPhone Android and a Kindle app as well and in 2013 we started experimenting and tried out Windows 8 app for tablets.

A little bit about tablets versus phones. People, when they talk about mobile, like some people would talk about tablets and phones together, some people separate them, so I want to talk about the differences between tablets and phones, because other people unfortunately, depending on where they come from they may associate mobile to be tablets and phones, when I think they are very different devices.

The first thing is obvious, I don’t you have to be attending this conference to know that the screen size is different, but it makes a big difference. The screen size on a tablet will dictate the amount of features that you’re going to have available on your app. That may not necessarily be a big shift, but when you look at the phone it makes it even more critical. Where you design a new app for the phone, you have to be very precise and methodical about picking out the features that are important for phone users, because the phone has a much smaller screen size. If you put features that I know are particularly critical, it’s going to eat up all that space. Also on the phone, because you need that type of area, other devices tend to be larger, so they take even more space from other features, so you have to be very careful about what you pick on your mobile phone. Again that will create a very different strategy for you when developing a tablet app versus a phone app. Data, that’s also very critical. With tablets it turns out, people use them through wireless networks, whereas phones are typically used through cellphone data at networks. Even though on your tablet you may be at home using your wireless network and getting a lot of data back and forth. On your phone, even when you get LTE, you may be get like 2 bars at most, depending on where you are.

Developing features on the phone that transfer a lot of data, whether it’s video, images etc. may not necessarily be your best bet, whereas on the tablet, because you are connected to wireless network, you probably are able to get even more information, more data quicker. So the features that you develop for the tablet can be more engaging and more rich.

Then you have the difference between portable versus pocketable and this is kind of an interesting difference as well. Tablets are portable, you can move them around. If you are talking about mobility, tablets are almost just as mobile as laptops are. People carry them around almost to the same extent, whereas a phone, people carry them to the bathroom. The way in which customers use their phones and tablets are going to be very different. The times of the day when they use them, the intent what they are trying to do with these devices are going to be very different based on purely that.

Then shared versus personal. If somebody was to ask you: ‘can I borrow your tablet’, people are a little bit more comfortable sharing their tablets. When you ask them: ‘can I use your phone’, it’s like: ‘why do you want my phone’. It’s a lot more personal. The phone has become a very personal thing. When I got my first smartphone, I remember the lady at the counter telling me: ‘this device is going to change your life. You’re going to develop a very personal relationship with this device’. I thought: ‘lady, you’re crazy’, but she was right. Most of the apps that you use on your phone are of extremely personal nature. You check your e-mail, check messages, make phone calls. Google maps, people tell me: ‘that’s not personal’. How much more personal can you get than telling your exact position in the world.

When I talk about the Zappos team and how it’s structured, we have our design team that designs all of the features for our IOS, Android and mobile website. We have the team of engineers, iOS, Android and embed and our back end services team that develops all of the API’s that allow us to connect to all of the website services.

We don’t necessarily develop a full on check process or full on product services. We consume the same services that are on the website, we only expose all these imprints via API’s. So the back end service team allows us to create that bridge and allows us the have a very small team. The Zappos team is made up of 12 people.

Then we have a QA team and a customer support team, that also supports our applications.

The iOS team develops the iPhone app and the iPad app. You may think: of course the iOS team will develop an iPhone app and an iPad app, isn’t that the same. The truth is, iPhone and iPad are going to be and are very different. If you look at our iPad versus our iPhone, you will see that the iPad has a lot more features, like the explanation of our categories, it’s much deeper. Whereas if you look at the iPhone site, you see very selected category groups that have been bedded and put together just for ease of consumption. If you look at the bottom tab area, you will be that on the iPhone you need the icons to be much bigger, whereas on the iPad they are slightly smaller, but that is because the device itself is much larger. So the strategy changes quite a bit, the usability changes quite a bit.

The iOS product screen is very different as well. You can see that on the iPad, there’s a lot more information available to you right away, whereas on the iPhone it’s just focussed on: give people the options, the different colour sizes. There is a tab to explore product information, but that’s not bothering the space. You can see the app cards and favourites being really large, really prominent, whereas on the iPad screen they are obviously available, but the design is quite different.

The Android home screen is also different on the tablet and the phone. Similar issues that we have with the iOS iPad and iPhone. Our iPhone product screen is also quite different. The differences don’t stop just as between the iOS tablets and phones. We are also differentiating between the operating systems. We look at iOS versus Android and these are the phone screens. The iPhone design is quite different from the Android phone screen. This was an interesting challenge for me. When our Android developers came to me and said: ‘we want to develop a very customized Android experience. At first I thought: ‘let’s not do that, because branding. We’re not going to confuse our customers’. But it turns out that they were right. Developing a user experience that’s tailored for Android customers and was able to connect with our Android customers much more, because people could have chosen to buy an Android device, they are sold to that user experience and to force them into an iOS device and to an iOS looking field, it’s like telling a Mac user to download that Windows program that looks just like Windows. That’s not going to work. People have particular preferences and you want to work towards them. Even though I had my hesitations towards launching very different user experiences, in the end our conversions for Android went, it was really crazy. Part of that is, the design patterns like the tab bar for Android being at the top versus the iOS being at the bottom. That’s because the Android devices have abundance on the bottom of the screen and you don’t want to interfere with that user experience. That’s just one example of that, but the whole user experience is quite different. The returns of making that investments was humungous.

We have iOS specific features. In iOS we have used it as a platform for testing, as we have done in Android. We have these features that were not sure at launch, but we wanted to test it so we built something called negative filtering, which I allowed people to say: ‘I don’t want any items that are grey or white’ and be able to pull that. That actually worked out. Now that we know that feature is actually something that our customers like and use, now we can go ahead and implement it in Android. We actually stuck to priority and said: ‘no you have to do priority across Android and IOS, this feature would have taken much longer and it actually didn’t estimate with our customers, we had lost all that time building it.

The other feature that I have, I took this to a couple of people. It’s the little cat, that’s an iOS specific feature, the customers said to love that, so we added settings that allows people to select whether they want a dog or a rabbit to take their item and put it into their cards. It doesn’t really do anything, but people just love that feature.

On Android we experimented with widgets. We built a widget that allows people to track their item, so people don’t have to look into the app, find their order and find out where their items are, they can just access this widget and immediately find out where the item is. It’s a very Android specific feature that, if I stuck to priority we would not have developed.

We also developed a daydream app which is a screen saver for Android devices, very specific to Android. What this does is, depending on your Geo location we find out the weather and if it’s raining, we recommend weather items that match that particular location.

Mobile website. I talked a lot about apps, but there’s still a lot of value to having a mobile website. For one it’s a cross platform, so no matter which device you own, if you implement it right, all the devices are going to be able to access this mobile website. You don’t have to spend a lot of money to develop every tailored native experience from get go. You can start experimenting by building a mobile website. You get the data and understand where your strategy should go. Are there more iOS users, are there more Android users, are there more iPad users, are there more tablet users. People are not going to find your app from the get go without knowing who you are, without knowing the product that you have available. On the mobile website, if you use Google on your phone, you will be able to find it, Google will expose all that products and that’s something that you won’t have in native apps. If you have a native app, like I said a customer has to go to app store and download that app. You want to be in front of customers and this is a strong argument to having a website.

Commitment to loyalty. Only people who are truly loyal to your brand, who are really committed buying from you are going to download an app. People who just casually use your site and may not necessarily want to download, your apps are not going to do it.

Control over recycles. Everybody who has an iOS app knows that when you try to release an app, it takes a while for Apple to release it. You have no control over that. If you have a mobile website, you are in total control, roll back some money turning. Websites have been around a long while, you have tons of tools that allow to monitor and roll back, whereas in the mobile devices we are just getting there.

The same thing with AB testing. AB testing natively is very challenging today. It’s much easier to do on a mobile website.

Trends that we see. Technologies of devices and software will continue to improve, so all those changes about roll backs, monitoring, AB testing will eventually be resolved and will be able to get even more inroads into developing the proper applications that we would like for our customers to use.

Aggregation of data, this will continue to be very important. We will continue to gather all this information from all of these different devices, because we know if something gets fragmented, the data that come from mobile devices may not necessarily be integrated with data of the user behaviour that’s taking place on the website. I think all of this behaviour is emerging and we’ll see a better understanding of what our ecosystem looks like.

Lastly personalisation. I think any app for a tab, any chance of being successful will have to be tailored towards our customer and have very specific features that are going to resonate with our customers, whether it is products that are tailored to the customer when they open the app or whether it’s information about the products that are particularly interesting to those customers. Personalisation is going to play a really key piece in your mobile strategy.

Looking at what people have been saying on Twitter, they loved the presentation and everybody is fascinated by the fact that for Android and iOS users you do things differently. If you would be working in a market which is about 1/20 of the size of the US northern American market, would it be profitable to do it, because it’s a much smaller market. 

I believe it can be, but you have to really to your analyses, look at the data that you have available, see where your customer is going. I think not taking advantage and not realising that your customers are using all of these devices could harm you. Like your competitors could get in front of you and take those customers away from you. You have to stay a loop ahead of the game. Starting earlier makes me feel like I’m running faster, exactly the same thing. You have to be ahead of your competition, understand where your customers are and make sure that you aren’t going to loose that opportunity.

You mentioned personalisation. What we saw is still largely context based, operating system based. How far is Zappos to their personalisation? 

We actually have been very fortunate. We were acquired by Amazon, so we have been able to use a lot of technology. We are not assuring data across, but we are assuring systems that allow us to understand our own data better. We are able to build all these recommendations based on this technology that’s now available to us.

One final question. When we say Amazon, we say low prices, competing on price. We also say Amazon excellent customer service. When we say Zappos, it is the ultimate goal in customer service, you have quite some examples. How important is price for your customers? 

We are working with a different customer base. I think that people who want better service, are coming to us. Not to say that we can just charge any amount, it has to be a fair price, but we are not in the business in competing for price, that is not our goal.