Zappos.com projects 150% increase in sales this year

Focusing on customer service is paying off for Zappos.com, CEO Tony Hsieh says. He upped his 2004 revenue projection by 25% Monday to $175 million -- which would amount to a 150% increase over 2003.

"We`ve already sold more shoes this year than we did for all of 2003, and we haven`t even hit our busy season yet," he says.

Hsieh says Zappos, No. 70 in Internet Retailer’s Top 300 Guide to online retailers, will continue to focus on customer service instead of advertising to build its market share in shoes as well as in other product categories. It will also play down discount prices and loyalty programs, he adds.

"We don`t believe in loyalty programs, because we believe that if we consistently provide the best service, then our customers will keep coming back because they naturally want to," he says.

To cut operating costs, Zappos recently relocated its operations from San Francisco to Las Vegas, where it benefits from having no corporate or personal income tax, a lower cost of living and a large pool of customer service workers, Hsieh says.