The Real Case in Social Media: Zappos CEO Not All Atwitter About Twitter

When reporting first began on ZDNet’s look at Zappos’ use of social media to build its online retailing business, its CEO, Tony Hsieh, had just crossed 600,000 followers on Twitter.

This past week, he passed 800,000. No, the reporting didn’t take that long. It just shows how fast you can gather followers, once you have momentum and critical mass.

Which Hsieh does. And the magnitude of his following generates a lot of media interest. It’s partly responsible for getting the ZDNet case study off the ground. But tweeting is bite-sized and fun, as captured in this recent Zappos video on same.

But, if you’re a competitor to Zappos and you think somehow that twittering and blogging are somehow the secret to its success as the Web’s most successful seller of shoes, you’re missing the point. Or, points, really.

First off, you’re going to take your eyes off the ball on how to best deal with customers. Which maybe Hsieh intends, as any happy capitalist warrior would. You’ll put a lot of executive, managerial and staff time into figuring out how to twitter, what to twitter about and then keeping the tweets flowing. The same with blogs.

Meanwhile, Zappos will be taking you to town, by spending as much time as possible on the phone with your customers. No benchmark exists at Zappos on average time spent with a customer on the phone. But you can be sure, if Hsieh’s crew did use such a metric, the company would rather that metric be going up, quarter over quarter, rather than down.

The “real” social media to Zappos – and the way the company really builds relationships with customers – are the telephone call and the email conversation, as this downloadable ZDNet case study shows. Twittering and blogging are just for recreation. It’s kind of hanging out under a shingle that says, hey, we’re playful folks. Let’s waste a little time together. Let’s entertain each other. And not try to sell each other anything.

Second off, you’re going to miss the real movement at Zappos. It’s figured out the shoe-selling game on the Web, through its wide selection, two-way free shipping and 365-day return policy. Its friendly unscripted customer service simply reinforces the position.

And you have to take note of its position. Sure, online only accounts for about 10% of overall shoe sales in this country. The NPD Group estimates total dollar sales of footwear at $42.8 billion in the 12 months that ended April 30. Sales by pureplay online retailers such as Zappos, as well as web sites run by retailers and manufacturers hit $4.7 billion.

Of that, 20 percent or so probably went to Zappos. The 10-year-old company’s sales hit $1 billion in 2008, with the vast majority of that coming from shoes.

But if you look at the right side of its home page, Zappos is signaling where it wants to go. New product turf such as housewares, jewelry and eyewear.

It’s very much a set of ambitions in flux.

That is in evidence just the span of the last six weeks. In mid-May (see top image, left), the options included Electronics and Entertainment (See “Jeff Bezos, meet Tony Hsieh. Zappos Moving into Electronics. And More.”)

Now, the Electronics and Entertainment options are gone (see current image, below). Hsieh and crew clearly are rethinking their options, when the Zappos promise includes free shipping each way on a computer or digital camera. And every one of the digital products it sells is going to be opened, tried out and used, before coming back.

But, directionally, you can see where Zappos is headed. Take a look, for instance, at Zappos’ new home page for clothing. Zappos clearly wants to be an online mall, defining itself by an ever-widening line of products that are profitable to sell over the Web and keep its two-way free shipping and other promises intact.

This is where the social media really are likely to come in to play. Wayne Kulkin, president of wholesale and chief merchant for high-end shoe maker Stuart Weitzman, forecasts the imminent arrival of a new form of virtual mall, where people interact with other people while considering purchases.

It’s “friends and family’’ marketing, applied to any product. Your mall lets you contact three or four of your best friends, while you’re in the process of shopping. For guys, it might be a pair of skis. For gals, it might be an evening dress. The site allows you to ping your friends, via tweets, SMS, email or even phone, and get them online with you. There’s a digital model of yourself, like an avatar, that you can match the product to or wear it on. You get live feedback from individuals you trust about whether the product works, whether it looks good on you or whether it sucks.

This practical for-profit use of social media is more likely what Zappos has in mind. It’s what could well separate Zappos and Amazon. Amazon is the quintessential disembodied full-line department store.

Zappos, by contrast, has worked relentlessly at bringing humanization to what can be an extremely cold online experience.

Don’t be surprised at all if Zappos executes the first interactive shopping mall, online. Before Amazon. Before department stores.

“Zappos would execute faster and quicker than these other guys,’’ says Kulkin. “I think this is something that within two years everyone is doing.”

But look to Zappos to be on the front edge of this.

Because this is how social media really builds a business. The current usage, like the Zappos video clip at the start of this piece shows, is just for fun.

Download: Enterprise 2.0 Case Study: Following Zappos

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