Marketing and Private Label Products

 Recommendation: To persuade the Zappos. com sell private label products to increase the revenue and decrease the transportation costs

Audience Analysis: The board of Zappos. com, Operation Department Manager, Marketing department manager. Accountants of Financial department manager.

Introduction

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Zappos, world’s greatest online shoes retailer.

Though we hit 1 billion in our annual sales last year, two years before we expected, we are now confronted with challenge to keep stable growth in revenue. our profit has been decreased slightly since we committed next day delivery. During the economic recession times, we have to make some change to conquer this problem. As Marketing department staff, my proposal is that we could produce and sell our private label products. we have good reputation and large customer network. We can raise our profit by produce and sell private label products

Transitions Let’s get started with the problem

Body

Double digit sales decrease during the economic recession times 1. During the economic recession times, our revenue remain growing slightly, however our growth rate has been decreased rapidly. Let’s see the chart of our annual sales growth rate since 2001-2009. 2. Since many brands sell Canadian distribution rights to other partners, we can not sell these brands on its Canadian site. As a result, we can’t set a distribution center there to achieve substantial volume.

Solution

Selling private label shoes which are designed in US headquarter, manufacture in China.  Corperate with Chinese local factory to sign a contract to produce guaranteed qualified shoes.

Benefits

Selling products from suppliers is less profitable than selling private label items. “If you can find a way to add 10 points of margin, you’re going to have a big success in that product line,” says Schmid, chairman and founder of J. Schmid & Associates in Shawnee Mission, KS. Selling products from suppliers is less profitable than selling private label items.

As we can see from the chart of Gross margin. 2. Selling  private label supports a catalog’s brand positioning. “Having hard-to-find or unique merchandise sets you apart — and this is especially [important] for a cataloger

Counters

 To Manufacture private label shoes, Zappos will increase R&D expenditures. It might be a problem for company’s operation cash flow. 2. Another big concern of sell private label shoes is risk of bad reputation of private label shoes. But I have confidence in our product department.

Transition: I have demonstrated the current problem we’ve met and I listed the advantages of selling private label items, the cost and benefits we would gain if we do this project. And the last, the next steps to be taken for this proposal.

Conclusion

As we realized that our annual sales growth rate has decreased rapidly, also our gross margin has been maximized. Zappos should improve all aspects of its business to prepare for the difficult economic times. By outsourcing manufacture to China and designing in US, it can bring Zappos low cost, high quality shoes. .

Final Recommendation: As Board of Directors of Zappos. com, you should consider selling private label shoes to our customers.

References

1. http://blog. minethatdata. com/2008/04/zappos-sales-trajectory-and-customer. html
2. http://bls. gov/fls/chartbook/section3. htm
3.  http://blog. minethatdata. com/2009/09/zappos-profit-and-loss-statement-2007. html
4. http://blogs. zappos. com/blogs/ceo-and-coo-blog/2008/02/19/zapposcom-update-february-19-2008

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