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How to Innovate in E-commerce

How to Innovate in E-commerce
Image credit: Zappos Labs

After 14 years and a $1.2 billion acquisition by Amazon, Zappos still hasn't hung up its innovation hat. To sustain a startup-like attitude, in 2009 the Henderson, Nev.-based e-commerce giant launched Zappos Labs, a San Francisco division staffed with 11 full-time employees dedicated to exploring what consumers want out of their shopping experiences, then creating new ways for them to engage on the main site.

Director Will Young describes Zappos Labs as a "testing ground" where the team is given free rein to experiment. By design, the department's budget is flexible. "Our mission is to innovate, and the secret to coming up with real innovations in e-commerce is to treat it like traditional R&D," he says, noting that if money were the objective, the company could just invest in coupon apps and call it a day.

The goal is to figure out the perfect blend of commerce, social media and content. Zappos Labs has launched more than a dozen products; most are short-lived, but some hold great promise. Among them:

  • Glance suggests curated items and trends based on customer selections. Since Zappos' inventory can be overwhelming--more than 140,000 items from 1,000 brands--it aims to improve user experience by offering edited collections of products that are uncluttered by filters and multistep navigation.
     
  • PinPointing takes what customers pin on Pinterest and recommends similar items available on Zappos. Young says the project was the result of assessing the popularity of social networks and leveraging them to drive sales and growth.
  • TweetWall lets users browse the image gallery at Zappos.com and see customers' product tweets--"the good and even the ugly"--in real time. User-generated content is a foolproof way to drive interaction. What better way than to give customers an excuse to post selfies?

This story appears in the September 2013 issue of Entrepreneur. Subscribe »

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