How Experiential Retail Is Leading to Higher Conversion Rates and Order Values for Zappos

To keep pace with today’s hypercompetitive retail landscape, the leaders of Zappos.com have taken bold steps to evolve their e-commerce strategy to better serve the changing consumer.

“Our new strategy is anchored on experiences versus transactional relationships with our customers,” explained COO Arun Rajan.

He explained that previously, the Zappos site was optimized for looking for a specific item, either directed through Google or its own search tool. “We want to continue to be available to that customer, but what we’re finding is a new type of customer who wants to engage with us. That transformation from the pure search to this experiential journey is what we’re calling ‘best customers’ experience.’”

As part of that approach, the company has built hyperverticals within the Zappos site that cater to specific audiences and provide opportunities for discovery and direction.

Jeff Espersen, GM and head of merchandising, said, “We have this great website that has a lot of stuff on it, so we want to curate these assortments to mean something to the consumer,” he said.

Zappos Jeff Espersen
Jeff Espersen, GM and head of merchandising at Zappos.
CREDIT: PATRICK GRAY

In 2017, for instance, Zappos launched The_Ones, a platform for female sneaker enthusiasts, and that same year, it debuted the latest version of The Style Room. Karrie Mieklereid, lead buyer for The Style Room, said: “[We wanted to] create an immersive experience for our fashion customer that curates not only brands but trends and makes that experience easier for them.”

Other hyperverticals on the website are focused on the running category, kids’ market and adaptive fashion, a new but fast-growing business for Zappos.

To take its personalized approach a step further, the company is now reworking its high-end division (currently dubbed Zappos Luxury) and expects to relaunch the channel in August under the name Versional.

Zappos Adaptive
Zappos Adaptive team recently hosted a runway show on the company’s campus.
CREDIT: Courtesy of Zappos

Rajan describes the new merchandising structure as a pyramid, with the most directional sites at the top. “Versional keeps Zappos on-trend, and then that trend trickles down to our Style Room on Zappos, which is a broader base but maybe not the earliest adopter of that fashion trend,” he explained, adding that the core Zappos site sits at the bottom of the pyramid, serving more of a family audience.

“This is how a lot of our brand partners segment the market, so we want to have channels that can map their segmentation of the market,” Rajan explained.

Executives pointed out that experiential retail has numerous benefits.

For The Style Room, for instance, Mieklereid reported that the company has seen an increased conversion rate and a higher average order value.

The verticals and channels also are an opportunity to connect on a deeper level with today’s consumer, according to Espersen.

“It means something to the customer to figure out: What does Zappos stand for, or what does the brand they’re buying stand for?” said Espersen. “They care about what’s happening in the world today, [and] not only environmentally. So how do we intertwine our culture with our consumer and our brands that we sell on the site?”

He pointed to Zappos’ extensive charity initiatives as one topic it could discuss more with shoppers. “We do a lot of really cool things, and a lot of times, we don’t tell people outside of Vegas,” he said. “There is a lot of opportunity to tell our story to the country and to the world at this point.”

Espersen also aims to develop more stories around unique product on the site. While Zappos has long stocked special makeups and shoe exclusives, it hasn’t dabbled heavily in collaborations — until this year.

He said a St. Patrick’s Day Brooks collab with a specially designed box sold out quickly, so similar launches are on the way. “We want to do more collaborations with our brands around differentiated product. These drive customer interest and traffic, especially for the younger audience,” said Espersen.

Brooks Launch 6 Shamrock
Brooks Launch 6 Shamrock
CREDIT: Courtesy of Brooks

To strengthen its storytelling capabilities, Zappos has opened an office in Los Angeles that it is characterizing as a creation studio. The team there is tasked with developing content across multiple platforms, but with a particular focus on engaging consumers on social media.

“We put in a dedicated social team in L.A., and the reason they are based there is because that’s the audience [we want to reach],” said Kedar Deshpande, VP of technology and quantitative marketing.

The goal, according to the company, is to stay top of mind with the consumer and to be a helpful resource — in keeping with the company’s focus on customer service.

“We want to add value to customers’ lives, not just show our ad,” said Rajan. “We could just show ads on TV, but that doesn’t align with who we are. It’s about: How do we serve our customers? How do we give them a better experience?”

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