To: Mr.
Clark Hansen
From:
Christian Gange
Date: 6 March
2019
Subject:
Investment Recommendation - Zappos
I am writing
to discuss Anima Mundi Development Partners’ potential investment in the
company known as Zappos. Zappos is an online clothing and shoe retailer based
in Las Vegas, Nevada. Zappos is heavily involved in the community as they have
given back to the community though their “Goodie Two Shoes” program, “Zappos
For Good” program, among many other examples. They are also heavily conscious
of the environment and have made extensive efforts to make the world a better,
more sustainable place. Zappos is a company known for giving back and because
of this, they should be considered as a company to invest in by AMDP.
Before I go
into further detail about Zappos, I want to elaborate on AMDP’s standards:
triple bottom line, corporate social responsibility, social enterprise, and
carbon footprint.
AMDP Standards
Triple Bottom Line
The triple
bottom line consists of 3 P’s:
People – The
companies pay fair wages to their employees and take steps to ensure that there
are humane working conditions at supplier factories. They also make an effort
to give back to the community.
Planet –
Indicates that an organization is making an effort to reduce its ecological
footprint as much as possible including reducing waste, investing in renewable
energy, managing natural resources efficiently, and improving logistics.
Profit – A
triple bottom line company sees profit as a part of the business plan where
they want to use being eco-friendly as a way to increase their profit. For
example, a company can turn a profit by recycling waste into its products.
Corporate Social Responsibility
It’s a way
for companies to take responsibility for the social and environmental impacts
of their business operations. There are many ways to practice corporate social
responsibility, which include environmental efforts, philanthropy, ethical
labor practices, and volunteering.
Social Enterprise
This is also
known as social entrepreneurship and it encompasses ventures of nonprofits,
civic-minded individuals, and for-profit business that can yield both financial
and social returns.
Carbon Footprint
The total amounts
of greenhouse gases produced to directly and indirectly support human activities,
usually expressed in equivalent tons of carbon dioxide. In addition, it is the
sum of all emissions that were induced by your activities in a given time
frame.
Zappos Company Background
Zappos was
founded in 1999, by Nick Swinmurn when he was walking around a mall in San
Francisco and unable to find a pair of shoes that were both the right style,
color, and fit. Swinmurn realized that finding the perfect pair of shoes at a
retail store was a problem and with that in mind he founded Zappos.com, which
was going to be the “best online selection of shoes in terms of brands, styles,
colors, sizes, and widths. Since then, Zappos has expanded into not only being
the best online shoe service but in any category of online shopping. On May 1,
2010, Zappos was restructured into ten separate companies under its family
umbrella so they can sell “anything and everything” and to give customers the
best service possible. In 2017, Zappos received two awards from the Cult Brand Summit, which were the brand
that has attained cult status among consumers, and “The Pinnacle Award”, which
is given as acknowledgment of Zappos’ significant success and achievement among
peers.
Sustainability Efforts
Zappos
believes that sustainability is crucial to both their business and the planet
as a whole. The highlight of their sustainability effort was their “LEED-Gold”
certification for their headquarters in downtown Las Vegas where they renovated
it to the green building standards of the United States Green Building Council.
Their projects also include a focus on energy conservation where their model
demonstrates a 25% reduction in energy use against the baseline consumption and
a focus on water conservation where their collective efforts of landscape
irrigation practices, landscape plant selection, and domestic water fixture
resulted in an impressive 57% reduction in water consumption. In addition to
those highlights, they’ve also focused on the reuse of materials, increase in
their recycling efforts, and focused on indoor air quality and health.
Financial Track Record
Zappos has
been consistently growing as a company since being founded in 1999. They became
a subsidiary of Amazon after being acquired by the company for $1.2 billion in
2009. They employee roughly 1,500 people and produce in excess of $2 billion in
revenues annually. They’ve continued to grow as they spent $350 million to
revitalize downtown Las Vegas since they moved there in 2013 and plan to
continue to grow as a company in the coming years as online retail sales continue
to become more popular.
Respect in the Industry
Dan
Pontefract is a contributor to Forbes and he wrote an article praising Zappos
for being famous about their company culture. He goes on to say that that have
defined a link between people and profit where they work for a happy workforce
but also balance it with a purpose of profit bottom line. “Everywhere you look
people are smiling and when your eyes intersect theirs, it’s the friendliest
smile you’ve ever received” is what he said when discussing the overall vibe of
the office setting. In addition, he complimented their role in the community
where they fed over 1,000 Las Vegas families on Thanksgiving in 2014 and gave
pairs of shoes and socks to all of those in need.
Footwear
News wrote an article about Zappos’ series of new and ongoing programs and
partnerships including GIVE, by Zappos for Good, Pawlidayz, Promapalooza, Kids’
Farmers Market, among others. The article includes quotes from Zappos
executives who mention that their goal is to deliver happiness and to achieve
that through out of this world customer service and by enriching their
customers. Zappos is heavily involved in the community through charitable
donations, animal advocacy and adoption, and sustainability and
environmentalism.
My Recommendation
Zappos is a
growing company that has become a dominant force in the online retail industry
and now that they are a subsidiary of Amazon, they will only continue to grow
in the space since they don’t have to compete with them as much. They strongly
align with the values of AMDP with how they support their employees, the
community, and the environment. With all of that in mind, I strongly suggest
that AMDP invest in Zappos.
Works Cited
“A Simple Explanation of
the Triple Bottom Line | University of Wisconsin.” University of Wisconsin
Sustainable Management Degree, University of Wisconsin,
sustain.wisconsin.edu/sustainability/triple-bottom-line/.
“About Zappos.” Zappos.com,
www.zappos.com/c/about-zappos.
Boley, Michael. “Cult Brand
Summit Presents Zappos With Multiple Awards.” Zappos.com, 5 Apr. 2017,
www.zappos.com/about/cult-brand-summit.
Caramela, Sammi. “What Is
Corporate Social Responsibility?” Business News Daily, Business News
Daily, 8 June 2018,
www.businessnewsdaily.com/4679-corporate-social-responsibility.html.
Clack, Erin E. “How
Charity-Focused Zappos Is Making a Difference in Its Community.” Footwear News,
Footwear News, 30 July 2018,
footwearnews.com/2017/focus/news/zappos-for-good-charity-pawlidayz-443226/.
Pontefract, Dan. “What Is
Happening At Zappos?” Forbes, Forbes Magazine, 9 Aug. 2016,
www.forbes.com/sites/danpontefract/2015/05/11/what-is-happening-at-zappos/.
“What Is a Carbon Footprint
- Definition.” Time for Change,
timeforchange.org/what-is-a-carbon-footprint-definition.
“What Is Social Enterprise?
| Knowledge Base.” GrantSpace, Foundation Center,
grantspace.org/resources/knowledge-base/social-enterprise/.
“Zappos For Good Brings The
Brand's Community and Charitable Work To Life.” PR Newswire: News
Distribution, Targeting and Monitoring, 1 Nov. 2017,
www.prnewswire.com/news-releases/zappos-for-good-brings-the-brands-community-and-charitable-work-to-life-300547247.html.
“Zappos Sustainability.” Zappos.com,
www.zappos.com/c/leed.
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