The ecommerce industry lost one of its pioneers this past week.
Tony Hsieh, the co-founder and former CEO of Zappos.com—the online shoe retailer that under his leadership helped change the face of retailing in the early days of ecommerce and later sold to Amazon.com in 2009 for $847 million—died on Nov. 27 in a house fire in New London, Connecticut.
Details on the exact cause of death have yet to emerge, but he passed away at age 46 in a Bridgeport, Connecticut, hospital apparently after sustaining injuries in a house fire, according to Zappos.com and reports in major media outlets. Many of us at Digital Commerce 360 knew Hsieh (pronounced Shay) very well from the launch of Zappos.com over the years we published Internet Retailer magazine, InternetRetailer.com, and the Internet Retailer Top 500 Guide.
Zappos launched in 1999, the same year our company founders Jack Love and Kurt Peters launched Internet Retailer. I was the founding editor of the magazine then and remember calling Hsieh and asking for an interview on start-up web-only merchants, and he graciously agreed to answer my questions.
I don’t remember all of the details from that interview, but I do remember that he told me that Zappos would be around for the long haul.
The reason: They were on to building a company culture and customer service model unlike anything else around.
A culture and customer service model unlike anything else around
He and Zappos did just that. Back in 1999, nobody except for Hsieh and Zappos believed in selling shoes online. Conventional wisdom at the time held that only physical stores could sell shoes because of the personal nature of what the customer wanted. Feet come in all shapes and sizes as do what consumers want to wear on them.
An online retailer, detractors said at the time, couldn’t possibly stock enough inventory and provide enough personal service to make people want to select shoes from a static image on a website and make a purchase over the web.
Tony Hsieh, founder of Zappos.com
The other big problem was returns. Store merchants used to contend that, given the profit margin on selling footwear from sneakers and running shoes to boots and loafers, massive returns from unhappy customers returning items that didn’t fit or were not what they wanted was a fulfillment and logistics nightmare.
But in the end, the critics were wrong and Hsieh was right. Early on, Zappos adopted one of the most fluid and groundbreaking customer service policies on the web. All purchases made online came with free return shipping. Zappos also charged no restocking fee. It processed nearly all of its returns as well as order shipments through United Parcel Service of America Inc.
To return a purchase, customers printed out a packing label from Zappos.com, attached it to the original package, and then dropped it in any UPS box or shipping facility. Customers had 60 days from the date of purchase to return merchandise. Customer experience is the only thing that matters for long-term success, and that includes free shipping and free returns, Hsieh told Internet Retailer in 2003.
Pushing ahead with free returns
He was right then, and his foresight still proves correct today. Maybe Hsieh and Zappos don’t get credit for establishing free returns, but they do get lots of credit for doing it bigger and better than almost anyone else, with the exception of Amazon. Hsieh and Zappos also paved the way for how an ecommerce company can build a winning culture and customer service model that resonated with buyers. A call to a Zappos customer service representative to resolve a problem or ask a question was meant to be handled more like a call from a friend—and not just one more transaction.
Zappos distilled this fundamental approach to online customer service and ecommerce with a unique company culture and training model the company called Holocracy. All employees attended a mandatory orientation to get acquainted with Holocracy. Some workers were sent to a two-week orientation at the Zappos’ fulfillment center in Louisville, Kentucky, and Zappos wasn’t afraid to weed out employees that didn’t fit in.
After the first week, Zappos offered a buyout of one month’s salary to new employees who don’t fit the culture, according to a Bloomberg story Internet Retailer posted in July 2015. Anyone who showed up late for the daily 7 a.m. start was fired on the spot. New employees needed to pass a final exam by answering at least 90% of questions correctly—or they were out of the job.
The strategy for customer service and culture strategy worked. Three-fourths of shoppers who made a purchase each day on Zappos.com were also repeat customers, Hsieh told Internet Retailer in July 2007.
When Amazon acquired Zappos for $847 million in May 2009, it was the blockbuster deal of the time. By then, Zappos had topped 8.2 million in total customers and achieved its 2008 sales goal of $1 billion.
So Internet Retailer, now Digital Commerce 360 Retail, has chronicled how Hsieh became an ecommerce innovator and pioneer.
But more important, he liked and respected people—including trade press reporters. Even as Zappos grew in size, each year Hsieh personally responded to our annual Top 500 questionnaire, beginning in 2004 when we first began publishing our industry rankings of the web’s biggest online retailers.
He took the time to field our questions directly or personally direct them to somebody who could address them. That may seem like a small thing to a big online retail CEO with lots on his mind, but it was monumental to us.
He respected us, and we respected him and Zappos and that humanistic attention to detail is the sign of a great human being. Hsieh will be missed in the ecommerce industry because now he is gone. What remains, though, is a legacy of a great guy and an ecommerce pioneer.
I know it’s a legacy we at Digital Commerce 360 won’t forget.
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