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now I will be talking a bit about the general external environment in the U.S. where
zappos is located, using a pest analysis to describe it.
For the demographic segment, the U.S. has a population of over 300 million, with a
median age of around 36 years old. The whole working and middle class make
which would include most of Zappos customers make up around 80% of the
population, so there are definitely a lot of potential customers which the company
has yet to reach. This large middle and working class has an increasing disposable
income which would allow them to comfortable spend on online products.
For the Political/legal aspects, although the workforce in the U.S. is not very
unionized with just a 7% unionization rate on the private sector, there are
regulatory laws to protect the workers and their salaries, although Zappos has never
been known to exploit their workers, on the other hand they encourage them to be
proactive and make decisions on their own without the need for further
consultation. One relevant union called the retail, wholesale and department store
union represents service, sales, clerical and maintenance workers like those working
at Zappos. There are also well established antitrust laws to promote fair
competition, prevent monopolies, the formation of cartels and benefit consumers.
The main statutes are the Clayton act, the Sherman act and the federal trade
commissions act. Coorporate tan rate can vary anywhere from 15-35%
The general economic segment has always been attractive for firms to compete in
due to their large population and level of disposable income. Also the current
inflation rate sits very low at 1.7%. There is a trade deficit of 41 billion meaning that
the values of its imports are higher than it exports. However the country faces a
current national debt reaching 18 trillion dollars, which is increasing at a high pace.
This would pose a risk to the people due to the fact that is the government hits their
debt ceiling they would no longer be able to finance operations like medical care or
social security so disposable income would decrease.
For the sociocultural segment, the need for convenience and easy shopping is an
important trend to notice in the U.S. marketplace. Leisure time has decreased and
online shopping will increase in demand in the industry as people seek more
convenient ways to shop like from their computers or smartphones rather than
physically visiting a store which may be far away or not easily accessible. The
Americans are hard workers that spend long hours at their job so they want to
maximize the amount of free time they do have by choosing easier and faster
alternatives brought by online shopping.
Finally for the technological, there is also a rise in online retailing in the industry. A
smooth transition between online and in-store shopping continues to become a
fundamental criterion for not only the customers, but is also required to remain in
the competition. Online sales and e-commerce are on the rise throughout the U.S.
last year 8% of all total retail sales were made online, accounting for 263$ billion
dollars, this share is expected to increase to 11% by 2018, so there is definitely a
steady projected growth for online retailers.