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.

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