Other nuggets from the report include the following:
1) Much of Zappos growth is coming from diversification and acqusition. According to CEO Tony Hsieh, non-footware categories including apparel and watches are growing faster than the core business. The company recently acquired such non-footware sites as 6pm.com and has started some outlet stores.
2) An astounding 75% of Zappos’ current orders are from repeat customers. This may initially sound like a good thing, but that is not necessarily the case. It could mean that Zappos has tapped out its potential customer pool or could be having a difficult time acquiring new customers at a reasonable price. Obviously, any company needs a healthy mix between repeat business and new customers.
3) Hsieh suggests that the outlets allow Zappos to charge more online and says that they will continue to focus on service and selection rather than price. He attributed much of their growth to repeat business and word-of-mouth.
It is interesting to see an example of a online business that has seen great success without following the more popular business model of capitalizing on SEO and low operating costs to bring the lowest prices to the consumer. There is a lesson there for all internet retailers.