Amazon Is Buying Zappos!!!

Manolo says, oh noes! Amazon is buying Zappos.

Amazon.com is trying the shoe retailer Zappos.com on for size.

The companies announced on Wednesday that Amazon was acquiring Zappos, based in Henderson, Nev., for 10 million shares of Amazon stock worth more than $800 million. Amazon also said it would give Zappos employees an additional $40 million in cash and stock.

The acquisition is the largest in Amazon’s history.

Online shoe sales hit $4.3 billion in 2008, up from $3.3 billion the year before, according to Forrester Research. Zappos, a ten-year-old private company that has won fans with perks like free shipping and personalized service, is the largest player in that market.

Amazon has tried without much success to burnish its shoe offerings in the face of competition from Zappos. In 2007 it introduced a separate site, Endless.com, to sell shoes and handbags. But while Zappos received 4.5 million visitors in June, Endless.com got 777,000, according to comScore. Amazon also sells shoes on its main site, and allows outside retailers to sell them there as well.

“I don’t think Amazon has gotten much traction” with Endless, said Sucharita Mulpuru, an analyst at Forrester Research. “People will go to Amazon to purchase a lot of their core media products and consumer electronics. But it is not thought of in the same light when shopping for apparel, accessories and footwear.”

Zappos, Ms. Mulpuru said, “is one of the few sites out there that people think of first when they think of footwear.”

What worries the Manolo is that Zappos has by far the best customer service culture on the interwebs.

Look at this story for confirmation of the sort of thoughtful people who are working for Zappos, the company which encourages its employees to act in human and humane ways.

By comparison, Amazon’s customer service culture is less stellar.

Of the course, Jeff Bezos is claiming Amazon intends to maintain the Zappos culture intact.

Jeffrey P. Bezos, Amazon’s chief executive, said in a video clip about the deal that Zappos “has a customer obsession which is so easy for me to admire.” He added: “I get all weak-kneed when I see a customer-obsessed company.”

Okay, but please allow the Manolo to take the wait and see attitude.

P.S. Here is the letter from Tony Hsieh the CEO of Zappos to his employees. As Manolo can tell you from personal experience, Tony is the good guy, and his letter goes some distance in reassuring the Manolo.

14 Responses to “Amazon Is Buying Zappos!!!”

  1. Virginia Postrel July 22, 2009 at 8:39 pm #

    I’ve always liked Amazon’s customer service, even if it doesn’t rise to Zappos levels. Jeff Bezos really is obsessed with the customer experience, so I’m optimistic that they’ll learn from Zappos. The Amazon shoe selection, however–not so good. That will be an overnight improvement.

  2. g-dog July 22, 2009 at 9:08 pm #

    Damn – I’d better get what I want now. Once bought out – most acquirers cannot resist playing with their new toy – and like most Christmas morning fiascos – they break it!

  3. The Thoughtful Dresser July 23, 2009 at 3:36 am #

    On the other hand Amazon ships internationally which Zappos does not

  4. gemdiva July 23, 2009 at 8:28 am #

    I LOVE Zappos!! Now, Amazon is also a favorite Internet shopping site of mine and their customer service has always been good, but Zappos has always been extraordinary. That’s what keeps me coming back and renews my faith in retailers in general. I really hope Zappos is able to maintain what they have built under their new management.

  5. Sara Darling July 23, 2009 at 10:56 am #

    I am curious as to how customer service will be handled. My experiences with Amazon’s customer service over the last few years has been pretty underwhelming(including a recent shoe purchase).

    However, the last time I had any interaction with Endless’s customer service (which admittedly was over a year ago, if I remember correctly) it was actually a separate group from the main Amazon customer service and they were actually very responsive and a pleasure to deal with, and absolutely comparable to the service I’ve received from Zappos. Hopefully this is something they have and will keep in place

  6. The Charlotte Allen July 23, 2009 at 11:31 am #

    What I worry about isn’t just the possible loss of Zappos’ terrific overnight service (free for for me, since I’m shoe-addicted) and quick, free returns but also the loss of some competition. Endless doesn’t have the range of offerings that Zappos has, but it does offer models that Zappos doesn’t, sometimes has better prices than Zappos, and often will carry my size when it’s out of stock at Zappos. The service at Endless is also quite good–although it doesn’t include free overnighting. I hate to see the shoe market shrink.

  7. dangster July 23, 2009 at 4:28 pm #

    From what I understand, Endless was not particularly profitable (if at all) for Amazon. It’s likely that Amazon will shut down Endless.

  8. raincoaster July 23, 2009 at 8:12 pm #

    I’m just waiting for the time, a few months from now, when Jeff Bezos has his ninjas sneak into your homes in the dead of night and take back your Keds and your Vans like they did with the George Orwell books. Just you wait and see.

  9. phyllis July 23, 2009 at 8:38 pm #

    Tony’s tweets really make me laugh! I hope he keeps doing them. I found him on Twitter through your tweets Manolo.

  10. catfriend July 23, 2009 at 9:00 pm #

    Is this not the crying shame? HATE hate the Amazon, with their one click shipping: Click on it for a closer look and whoosh! said item is instantly sent to you and your credit/debit card charged even when the item is unwanted. This is what Amazon did to me (they told me it was “convenient” – not for me) and it took too long at a crucial time of the month for my account to be credited. I’ve never bought from Amazon since. I suppose this means Zappos will be charging us Washingtonians sales tax too…. Sigh…must find new shoe shopping site.

  11. klee July 24, 2009 at 7:18 am #

    I’ve bought from zappos, amazon & endless. Although sometimes the shoes cost $5 more on zappos, the exceptional customer service and fast delivery make zappos a hands-down favorite. I hope it will continue….

  12. Pam Walter July 24, 2009 at 11:07 am #

    I am a regular user of both Zappos and Amazon, and I have to agree that they are both great companies, but Zappos’ customer service has always been better. Hope it stays the same.

  13. Jack July 24, 2009 at 1:05 pm #

    This speaks well of Amazon (and Bezos):

    Frankly, I love shopping at both places, so I couldn’t be happier.

    Jack

  14. NeeterLou July 24, 2009 at 6:35 pm #

    I live in Hawaii. Some places won’t even ship here, or want $40 to send you something that weighs one ounce and is the size of a peanut.

    Amazon gives me free shipping in a reasonable number of days, on their own merchandise. Independent sellers are the rip off artists.

    Zappos sends me stuff and I get it in 3 days.

    I’m kinda amazed at anyone buying Zappos, but at least it’s not Microsoft!