Shoe-ing Away Convention

If you're looking for a certain pair of shoes, there's a warehouse in Kentucky that probably has them. It has 1,000 brands in just about every style, size and color, totaling 4 million pairs of shoes.

Twenty-four hours a day, they're boxed up and shipped out to shoe shoppers sitting in the comfort of home.

Online shopping Web site Zappos is doing for shoes what Amazon did for books: trying to revolutionize not only how business is done but how people work.

The name is an adaptation of the Spanish word for "shoe." This year, nine years after going into business, Zappos is on track to sell $1 billion worth of shoes.

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'The Absolute Best Company Culture'

Zappos is headquartered in Las Vegas, where the company has office carrels similar to almost any other corporation. Right there in the middle of these cubicles, in an area nicknamed Monkey Row, sits Tony Hsieh, the emperor of shoes with no more office space than Dilbert.

"One of the things that's really important for us, actually, probably the most important focus for Zappos, is to make sure we have the absolute best company culture, and part of our culture is just having a familylike atmosphere," he said.

At times Zappos looks like one of those Internet startups that disappeared when the bubble burst. One afternoon, the entire finance department was racing Pinewood Derby cars in the office.

But unlike those failed startups, last year Zappos made a 5 percent profit -- and it helps that the CEO is setting an example by making a lower salary than some of the call center employees.

"I don't have a calculator, but my salary is $36,000 a year," Hsieh said. "So I think some of them make more than me."

Of course, he can afford it. Just a few years out of college, Hsieh sold an Internet company to Microsoft for $265 million. But to look at him you wouldn't know it.

He's not really into shoes. Hsieh owns about 10 pairs at the moment. Before Zappos he "used to have one pair that I would wear for two years until it had holes in it and then buy the same pair again."

Free Shipping, Both Ways

What he is into is building a company where people love to work and customers like doing business. Do that, he says, and the rest will follow.

"For us, Zappos isn't just about selling shoes online. For us we really want this Zappos brand to be about the very best customer service, the best customer experience," he said.

Selling shoes over the Internet would seem difficult because people want to try them on, see the size and color. Zappos overcame that with free shipping both ways: order as many shoes as you like because you have a year to return what you don't want.

They'll take several hundred million dollars' worth of returns a year. And if they treat the customers well, they do pretty well by the employees, too. Free food is always available in the cafeteria.

Even the snacks are free.

But that's nothing. The company also pays 100 percent of medical and dental benefits.

It sounds almost revolutionary. Hsieh says that's because companies that offer such benefits don't see the payoff until two or three years down the line.

At the heart of the Zappos revolution is the call center, where actual human beings answer the phone. There's no script, no time limit on calls and no push to sell more than the customer wants.

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