Amazon and Zappos: a good fit? |
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Shortly after Amazon.com announced last week that it was acquiring online shoe retailer Zappos, an Amazon employee posted a message on Twitter that captured some of the company’s hopes for the deal.
“Dear Tony: Please teach Amazon about Twitter,” read the message, addressing Zappos CEO Tony Hsieh. “And if you could help us get an 800 number on the home page that would be awesome.”
The tweet went to the heart of Amazon’s $900 million-plus gamble on Zappos — the largest acquisition in its history. Seattle-based Amazon.com Inc. is getting not only a category leader in online shoe sales, but an innovative company known for its quirky culture, well-developed customer service, and heavy use of social-networking sites like Twitter and Facebook for marketing and brand development.
Amazon plans to let Zappos continue to operate independently, but it’s also poised to draw some lessons from the Zappos model as it develops its e-commerce strategy going forward.
“They didn’t buy Zappos just because they sell shoes but because of how they do it,” said Patricia Edwards, a retail analyst with Storehouse Partners, a Bellevue-based investment management firm. “You can generate incredible customer loyalty through a good experience.”
Video: Zappos 10th Anniversary
Zappos has developed a loyal following and a reputation for offbeat office culture over the years. Its customer service staff members aren’t tethered to call times or scripts. The company offers free shipping and free returns for up to a year. And it puts a premium on social media: The main Zappos Twitter account has more than a million followers.
By contrast, Amazon’s customer service contacts aren’t as easy to find on its websites. The company offers free shipping for some orders over $25 and to people who sign up for the $79 Amazon Prime service. And its use of Twitter and other social media is still very much in the beginning stages. The official Amazon Twitter account has a relatively modest 5,000 followers, and is mainly a conduit for deal alerts, as opposed to a conversation with customers.
“At Zappos, every employee, not just the CEO, is empowered to do social media. They use some relatively loose guidelines to manage that, whereas at Amazon, its very controlled engagement with the public,” said Brian Walker, a Seattle-based e-commerce analyst for Forrester Research, a technology research firm.
“It’s hard for me to say who’s most likely to change” as a result of the acquisition, Walker said. “If anything, I’d say Amazon is more likely to learn from Zappos, if they want to.”
Video: Amazon CEO Jeff Bezos
Amazon CEO Jeff Bezos certainly appears to be a fan of Zappos’ style. In a video message to Zappos employees the day the acquisition deal was announced, Bezos gushed that he gets “weak-kneed” thinking about customer-obsessed companies like Zappos, and praised Zappos’ “totally unique culture.”
Amazon earlier made an attempt to compete directly with Zappos by selling shoes through its Endless.com website. But Endless, which adopted many of the same free shipping and return policies as Zappos, apparently didn’t make much of a dent in the market.
Zappos did $635 million in sales last year. Amazon doesn’t break out Endless sales, but data from comScore, an internet measurement firm, show that Zappos was getting significantly more web traffic. For the month of June, Zappos.com attracted more than 4.4 million unique visitors while Endless.com had 770,000 unique visitors.
Previous coverage:
Zappos CEO hands out bonuses, Kindles after Amazon deal
A blow-by-blow account of the Amazon-Zappos deal
Zappos CEO: 'Nobody was forced to sell to Amazon'
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ERIC ENGLEMAN is senior technology staff writer for TechFlash and the Puget Sound Business Journal, covering online retail giant Amazon.com. Engleman tracks Amazon's increasingly complex business, spanning ecommerce, Kindle, cloud computing, and more. He's been covering technology and other industries for the Business Journal since 2003.
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