Comfortable Fit

What happens when a company that built its reputation by setting the standard for customer service finds that it may be getting a bit behind the curve?

In the case of Zappos, the answer was derived from one of the company’s core values – embrace, rather than fear, change. In this instance, that meant outsourcing its DNS server infrastructure.

Since its inception a decade ago, Zappos has differentiated itself from the sea of online retailers by a strict adherence to a culture of customer service that pervades every part of the organization – something that company officials refer to as the “WOW” factor. Founder and CEO Tony Hsieh has been quoted as saying that Zappos is really “a service company that just happens to sell shoes.”

Zappos, which last month entered into a stock swap that makes Amazon its sole shareholder, receives approximately 100 million page views per month and racked up gross merchandise revenues of about $1 billion in 2008. It reached a watershed period in its development in 2002-2003 when officials realized that greater operational efficiency would be needed to support growth. “At the time, traffic on the site was doubling every year and we needed a reliable, easy-to-maintain solution,” says systems manager Kris Ongbongan, who is responsible for the network infrastructure and customer facing servers.

The issue for Zappos was its domain name system (DNS), which enables users to connect to the company’s site and to other retailers through Zappos’ DNS server. “As we grew we had to maintain more servers,” Ongbongan says. We wanted to reduce that footprint early on so we could have one less service to worry about.

“It was a matter of giving customers faster access to the site and better response time,” he says. “Our goal was to have the fastest responding website of all online retailers.”

Another reason for outsourcing was the company’s relatively small IT staff. “There were only two or three of us then and, based on the size of the business at that time, we didn’t want to make the investment in time, people and expenditures,” Ongbongan says.

Zappos only had one data center at that time, which also made DNS management relatively simple, but was in the process of adding data centers in Nevada and Kentucky -- moves that would have triggered significantly higher operational costs and increased the complexity of its DNS infrastructure.

It was at this point that Zappos began exploring solutions available through UltraDNS, a managed DNS services company (subsequently acquired by Neustar). The UltraDNS system is built on a directory services platform that consists of network nodes strategically placed around the world. The nodes form an Oracle database-driven infrastructure that replicates in near real time to make sure that DNS requests are resolved with the latest data available.

The transition was painless, Ongbongan says; there was no learning curve, and Zappos was running on the UltraDNS service within an hour.

There have been numerous additional advantages to using Neustar’s system, which Ongbongan boils down to four distinct areas: scalability, revenue assurance and reliability, ease of operation and disaster recovery.

“I think the biggest one for us has been reducing the complexity of our structure,” he says. “We are able to make fully auditable changes quickly,” reducing the amount of time required to make day-to-day changes by 60 percent. “We went from managing multiple servers to managing zero servers,” Ongbongan says. This also means that the DNS infrastructure is more secure since the company no longer falls behind on patches and other upgrades needed to protect against a variety of security threats.”

Increased scalability means no interruption in service for Zappos customers, even when traffic spikes during holiday shopping periods. “For customers it basically means faster response times than if we were doing it ourselves [while still receiving] the same high-quality service,” he says.

UltraDNS has also become a key element in Zappos’ disaster recovery plan. Because the DNS infrastructure is completely secure and independent of other areas within Zappos, it will always be working properly and ready when the rest of the company’s operations come back online after an incident. “This means DNS is one less piece for us to worry about,” Ongbongan says.

Ongbongan estimates that Zappos would have had to add at least 10 external DNS servers if it had not outsourced the function. Neustar is “able to scale along with our size,” he says. Zappos recently made a big push into apparel, “and every time we move into a new line of business there are new websites to be created,” he says. “Because we try to deliver the best online customer experience possible, speed is a key element as the company grows.”

And, while North America accounts for the bulk of Zappos’ sales, international growth could be part of the company’s future; outsourcing the DNS function will eliminate the need for foreign data centers without sacrificing speed and reliable service.