Sam Enslen asks Aaron Magness her top 10 burning questions about Zappos

I’ve been a fan of Zappos for years.

I bought my first shoes from them 10 years ago: a pair of gladiator-style Birkenstocks. Since then, lured by the promise of free shipping and free returns, I’ve bought Danskos, Keen, Converse, New Balance, Doc Martins, Frye . . . even Uggs and Crocs.

Over the past couple years, I’ve also become a fan of Zappos’ social media strategy – or what Aaron Magness reminded us Thursday is actually their “communication strategy.” I’m a Facebook fan, I follow their CEO on Twitter, and I am obsessed with the absurd and wonderful Zappos video blog.

So it was with giddy excitement that I attended the DCS members-only evening with Aaron and got to PERSONALLY ASK HIM everything I wanted know about Zappos.

Here’s what he had to say.

SE: One of the reason I’ve always shopped at Zappos is the free return policy. But isn’t accepting all those returns a major pain? How can it be profitable?

AM: Well, the retail model is proven. If you walk in a store, you can try on 10 different things without worrying about how they get back into inventory. Our goal is to do the same thing online: take away any concern a customer might have about getting stuck with something they don’t want.

Also, we’re a full-margin retailer; we don’t compete on price. So the costs of shipping, returns, and inventory are part of our business model.  If we were a discounter, we couldn’t do that.

We actually find that customers with the highest return rates are the most profitable.  Because what they do is continue to try new things, and they’re more comfortable buying higher-ticket items. So we don’t try to “manage down” returns at all.

SE: I heard that there’s a woman who buys a new pair of shoes from Zappos every Friday, wears them to work the next week, and then returns them. Does she exist?

AM: Wow, I’ve never heard of her. Every now and then we have someone who tries to take advantage of the system – but I don’t think it’s any more frequent than someone who buys a shirt, “tucks the tag” and wears it, then returns it. It’s just part of retail. You either factor it into your business model or you don’t.

We actually have customers with a return rate of 100%. But what we find is that even though they haven’t kept anything, they’re very vocal about how easy it is to shop at Zappos.

So they’re telling people, “if you don’t like it, send it back! I send everything back!” And everyone who she sends to Zappos will not send everything back. So it still works out.

SE: I’m kind of obsessed with Zappos TV . Who comes up with the ideas for those videos?

AM: The team is really creative, really fun, and they’re always looking to do crazy stuff. They drive about 80% of the videos, with people from other departments throwing in ideas as well. We give them the freedom to do pretty much whatever they want, which results in some great stuff.

SE: My favorite video of all time is when Pat and Melissa are fighting over who is going to be Pat’s best friend. It’s so absurd and funny.

AM: One that I am loving right now is Pat’s toilet prank. He basically takes a toilet and sits on it in various areas of the building ... you can imagine the results.

SE: Do the folks on the team have a background in video, or did they fall into it?

AM: Melissa has a design background, Darren has a video background, and Graham has a writing background and also does video. Pat was the one who just picked it up himself.

A lot of people from the outside don’t realize how much work goes into producing the videos. Each one doesn’t get  100,000 views — but the people who do watch them really enjoy them. And the employees love them too. So there’s different measurements of success.

One of the measurements is whether Tony [Zappos’ CEO] likes a video enough to Tweet it. That’s a huge deal, because anything he Tweets gets tens of thousands of views. So “how can we make Tony laugh” is a major motivator.

SE: One of Tony’s most popular blog posts is probably the one about how Twitter can make you a happier person. I think this is a pretty profound commentary on how using social media can change how you view your life. You can have something awful happen, and instead of being bummed, you’re like, “this is going to make a great Facebook post! I can’t wait to write about this!”

AM: That’s Tony’s point: to see things in that light. His driving force is positivity and happiness. He is not someone who complains. It’s definitely inspiring.

SE: Tony has some 1.7 million followers on Twitter. Do you have any other big Twitter fans?

AM: Well, Michelle Beadle from ESPN just sent a couple very positive Tweets about Zappos. She messed up an order, called in, and we took care of the problem. Her Tweet essentially said, “I never do this [recommend companies], but Zappos is the best and I’ll be a customer for life.” And Michelle has 100,000 followers.

Tyra Banks has done something similar; so has Alyssa Milano.  It’s these small, one-off interactions that really have an impact.

SE: My brother-in-law once ordered a really expensive pair of shoes from Zappos to wear to an event. The shoes didn’t show up, so he called in and they sent him another pair, no questions asked. My sister has probably told everyone she knows that story multiple times.

AM: Another company might have said, “we’ll put a tracker on the UPS ticket and get back with you in 30 days if it hasn’t been found.” We have a different method. We tend to trust people. And what you find is that if you do that, people return that trust.

Every day, 75% of our orders are from repeat customers. That means 25% are new customers. Of that 25%, almost half of them come from word of mouth. So we are still very much a word-of-mouth company, and we rely on those kind of stories to grow.

Samantha Enslen runs Dragonfly Editorial, manages Creative Crux and loves Zappos 4Ever.

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