Tag: Dogfish Beer

OM in the News: Quality Tales– Dogfish Beer and Zappos

If you are looking for a few interesting examples of companies choosing quality of service over quick money, here are two firms that I discovered in the news today: Dogfish  Head Beer and Zappos.

The Delmarva Daily Times (March 15,2011) reports that Dogfish, a well-known Delaware  brewery, just decided to stop its explosive growth by pulling out of markets in four states. Sales of  “off-centered beers for off-centered people” had grown into 30 states in the past 9 years. Founder Sam Calagione, a Discovery Channel minor celebrity, decided that Dogfish ramped up production too far, too fast, to guarantee quality. The expansion even resulted in shortages in the firm’s home state. Fans may be frustrated in Tennessee, Rhode Island, Indiana, and Wisconsin, but the company’s reputation for quality will be preserved.

Meanwhile, Next Montreal (March 16,2011) is reporting,  very unhappily, that Zappos is shutting down completely in Canada. Here is the message that the shoe e-tailer has just posted on its website:

We have made the difficult decision to shut down the canada.zappos.com site and stop shipping to Canada. One of our core values is to “deliver WOW through service”. That means the best selection of brands and products that can meet just about every individual’s needs as well as fast, free shipping and free returns, all at competitive pricing. Our Canadian customers know that we have not lived up to these service levels.
  
Zappos has struggled with uncertainty and unpredictability of delivering orders to Canada, given customs and other constraints. Considered by many to be  one of the best on-line retailers, it was not willing to risk its reputation for quality in a market where it could not meet its own standards.
 
In today’s economy, it is indeed unusual to see firms cede market share in order to maintain such high quality.
 
Discussion questions:
 
1. Refer to Table 6.5, Determinants of Service Quality, and relate Zappos’ decision to the 10 items.
 
2. What did Dogfish view as the danger of rapid expansion?