OPERATIONS

Report: Zappos overhauls management structure

BY Dan Berthiaume

Las Vegas – Zappos is reportedly instituting a radical overhaul of its management structure that will eliminate traditional managers and flatten the corporate hierarchy, even eliminating internal job titles. According to the Washington Post, this management structure is known as a “holacracy.”

Holacracy is designed to create overlapping circles of self-governing employees, giving workers more autonomy. Employees typically belong to several circles and while there are designated employees that assign tasks, each circle collaboratively makes decisions about how tasks should be completed. There is still some corporate structure and employees are still held accountable for their performance.

Zappos currently has 10% of its employees working in the new holacracy system and reportedly intends to move all employees into the new structure by the end of 2014.

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News

Report: Bezos suffers New Year’s Day kidney stone attack

BY Dan Berthiaume

Seattle – Jeff Bezos, founder and CEO of Amazon.com, reportedly had to be flown from the Galapagos Islands in Ecuador on Jan. 1, 2014 for emergency treatment of a kidney stone attack. According to NBC News, the Ecuadorian navy flew Bezos by helicopter from a cruise ship to his private jet, which then took him to the U.S. treatment.

Amazon.com sources indicated that Bezos did not require surgery and is doing well.

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MARKETING/SOCIAL MEDIA

Overstock.com to appeal advertising ruling

BY Dan Berthiaume

Salt Lake City – Overstock.com plans to appeal the tentative ruling of a California trial court, which prohibits the company from comparison price advertising unless done in conformity with new court-mandated practices, which the company says diverge widely from industry standards.

The court imposed a civil penalty on Overstock.com for each day it used price comparisons that were not in accordance with new practices the court outlined. From March 2006 to September 2008, the court imposed a penalty of $3,500 per day and from September 2008 through September 2013, $2,000 per day, amounting to $6,819,000 in total. The court also allowed the People to apply for payment of such fees and costs as are allowed by law. The company will appeal both the injunction and the amount of the penalty.

Among other restrictions, the court’s ruling would require more elaborate price comparison disclosures on individual product website pages, depending on the type of comparison made. The court did not order restitution.

Overstock.com currently finds at least one retailer selling a product and sets a comparative price with an average discount of 33%. The court ruling would require Overstock.com to instead use the average price from a range of retailers to set its discount prices.

"Respectfully, I believe this ruling is unjust," said Overstock.com president Stormy Simon. "And I know, because since 2008 I have been an integral part of the process by which we log, verify and advertise ‘compare-at’ prices. I am aware of the lengths we have gone to get this right on the millions of products that flow through our website. We will follow the ruling, while noting that the effects on our current practices will be small because, as we are the gold standard, we are already fanatic about getting this right. However, if fairly enforced, this ruling will force other retailers to change their processes dramatically (which makes one wonder why we are the ones who were targeted). We are an honest company committed to bringing justice to all our customers and suppliers, and that’s a promise. If this tentative ruling becomes final, we will file an appeal as soon as possible."

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