Consumer Insights on Outsourcing Your Core Competency

I just finished reading Tony Hsieh’s new book, “Delivering Happiness.” There are so many great stories and suggestions in this book, I want to share them with you over my next few blog posts. By all means, buy the book. It’s a great read for anyone who owns, or wants to impact, a business.

Early in the life of Zappo’s, 2002, a company convinced Tony and his team that they could handle all the shipping and fulfillment for Zappo’s since they were right next to the UPS worldport hub in Kentucky that would enable 70% of shipments to reach customers in two days via UPS Ground.

Unfortunately for Zappo’s, the logistics company was not able to live up to its commitments and the Zappo’s management team went from Las Vegas to Kentucky to set up their own warehouse and inventory system. Once it was up and running, the Zappo’s warehouse and inventory system outperformed the company they had outsourced to originally and Zappo’s took over all operations within one month.

Tony and other members of the Zappo’s management team ended up staying in Kentucky for five months. A facilities manager ended up staying in Kentucky for two years. Zappo’s learned a valuable lesson — never outsource your core competency.

Recently a friend just told me about ordering a pair of shoes from Zappo’s at 9:00 on Sunday night and receiving them the next day — and the shipping was free! Zappo’s must have one helluva an agreement with UPS. They also have one very happy customer in my friend.

Have you had a similar experience you’d like to share?

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About Insights From Analytics

Integrated marketing professional who generates insights from analytics to increase revenue. Daily blog now resides at www.insightsfromanalytics.com/blog.
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