Zappos Milestone: Focus on Apparel

The sky is the limit for Zappos, as the e-tailer turns its attention to the apparel world and moves further away from shoes.

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Don’t call a shoe retailer.

Though it made its name selling footwear, the online giant wants the world to know it’s about much more than stilettos and sneakers.

“Most people know us as a shoe company, but we’ve always said we’re a service company that just happens to sell shoes,” said Alfred Lin, chairman, COO and CFO of the company. “Now we’re changing that orientation a bit — we’re a service company that just happens to sell clothing, shoes, handbags, accessories and other stuff.”

In the near term, the company is focused on replicating its success with shoes in the clothing world. Looking into the future, however, Fred Mossler, who oversees merchandising, among other departments, said the potential for brand extensions is wide open, and he even threw out the long-term possibility of the Zappos name ending up on hotels and an airline. The common thread linking everything together would be the company’s emphasis on customer service.

But Zappos execs have always had a much larger vision for the company, said CEO Tony Hsieh. “We decided a long time ago that we didn’t want our brand to be just about shoes — or clothing, or even online retailing. We wanted to build our brand to be about the very best customer service and customer experience,” he said.

In fact, when Zappos first launched in June 1999, it was christened, but then renamed Zappos a few months later. “We ultimately chose Zappos so that we wouldn’t be tied to footwear forever,” explained Mossler.

And although the name Zappos is derived from zapatos, the Spanish word for “shoes,” most customers are not even aware of its meaning. “A lot of people actually think our name comes from the fact that we ship so fast — like we zap your order to you,” Hsieh said.

While Zappos clearly has a lot of ideas on the drawing board, building a bigger following for its apparel offerings tops the agenda for 2009. “The plan is to do for clothing what we’ve done for footwear online,” Hsieh said.

Clothing accounts for about 7 percent of the e-tailer’s sales (footwear is roughly 85 percent), according to VP of merchandising Steve Hill, but the category is expected to grow to as much as 40 percent with shoes comprising an equal 40 percent. The remaining 20 percent would come from other categories such as home goods and electronics.

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