How Zappos Shook the E-Tail Tree & Ended Up King of Amazon’s Shoe Jungle

 In Ecommerce, Spotlight

In case you haven’t heard, Amazon bought Zappos.

This happened back in 2009, and the final sales price was $850 million.

While the acquisition might seem like nothing more than the marriage of one popular online apparel company to another major ecommerce giant, it was much, much more than that.

In fact, the merger created a truly unique online powerhouse, the likes of which the world has seldom seen before.

While both sides made smart decisions in this merger, it’s Zappos we’re going to pay attention to in this post. How did a once-lowly shoe company play its e-tail cards so right as to be acquired by an ecommerce giant like Amazon? And what happened once the merger went through?

Here’s what you need to know.

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The Story Behind Zappos

The idea for Zappos came about in 1998. Founder Nick Swinmurn was in a mall in San Francisco, and he was looking for shoes. While one store had the style he wanted, they didn’t have the right color. Another store had the color but not the size. Nick spent an hour wandering the mall in pursuit of shoes, before going home frustrated and empty-handed.

The search for the ideal shoes went on at brick-and-mortar stores, malls and other places until Nick became so frustrated that he decided to quit his day job and launch an online shoe retailer (which was initially called Shoesite.com).

In 1999, Zappos was born. It would soon change everything we know about ecommerce.

Since then, Zappos has grown massively, thanks in large part to its acquisition by Amazon, and its industry-leading customer service model.

Why Amazon Choose Zappos

If you’re even moderately familiar with Amazon, you know the company doesn’t do much by accident or chance. Jeff Bezos, the founder of Amazon, is a profoundly strategic leader, and the 2009 purchase of Zappos was no different than any other strategic move he’s made en route to becoming the world’s richest man.

With this in mind, it’s clear that there were many reasons Amazon chose to purchase Zappos. But what were they?

The answer is simple: Selection, competitive pricing, free shipping and no-questions-asked returns.

These factors combined represent the ideal ecommerce shopping experience for consumers, which is why Amazon acquired Zappos and mimicked their shipping, hassle-free return policy and customer service model site-wide.

In this sense, Zappos is responsible, in large part, for shaping Amazon into the customer-friendly giant it is today, and for influencing the entire ecommerce industry.

What Zappos Got Right About Ecommerce

Even before Amazon purchased Zappos, it was leading the pack in online product sales. The company was famous for taking rapid online orders, shipping quickly, offering low prices and providing ample selection.

So, what did they learn from acquiring Zappos? And how has this shaped the brand in the years since then?

1. Customer Service

When the acquisition took place, Jeff Bezos said this about Zappos:

“Zappos has a customer obsession which is so easy for me to admire. It is the starting point for Zappos. It is the place where Zappos begins and ends. And that is a very key factor for me. I get all weak-kneed when I see a customer-obsessed company, and Zappos certainly is that.”

If you track the progression of Amazon’s customer service model since it acquired Zappos, you’ll see the prints of this loud and clear. From Prime’s free returns and free shipping to Amazon’s almost rabid customer service department, it’s evident that adopting Zappos’s customer-centric model was more of a self-betterment move than virtually anything else.

From Zappos, Amazon has learned things like the importance of the after-buying experience, and how a streamlined returns platform can create major loyalty.

2. Culture

Zappos is known, far and above, for its unique company culture. While there are many exciting things about the culture at Zappos (not the least of which are that Zappos utilizes Holacracy, a form of self-organization designed to give everyone at the organization a voice, or that Zappos customer service is so good, agents have been known to order clients pizzas), the most outstanding is their ongoing dedication to their customers.

While Amazon was already a very customer-facing organization, acquiring Zappos did a lot to increase the ecommerce giant’s focus on culture. In the words of Bezos ring true:

“Zappos has a totally unique culture. I’ve seen a lot of companies, and I have never seen a company with a culture like Zappos’. And I think that kind of unique culture is a very significant asset.”

3. Growth

Both Zappos and Amazon had their eyes on growth when the acquisition took place. Bezos, for his part, stated that there was “a lot of growth ahead of Zappos,” while Tony Hsieh, CEO of Zappos, was more focused on how being purchased by such a huge organization could create an ongoing growth platform.

Here’s what Hsieh said when the deal took place:

“We think that there is a huge opportunity for us to really accelerate the growth of the Zappos brand and culture, and we believe that Amazon is the best partner to help us get there faster.”

Amazon and Zappos: Stronger Together

Right now, Jeff Bezos is the wealthiest man in the world, and Amazon is one of the largest ecommerce platforms on the globe. With 310 million active users, 90 million U.S.-based Prime subscribers and upwards of 12 million products, it’s the king of the ecommerce jungle, to be sure.

Part of this success owes to the smart move of buying Zappos. In 2016, Amazon shoe sales climbed 35% from the previous year. By the first two quarters of 2017, Amazon shoe sale revenues had already grown by 18% from the year before.

These trends show no signs of slowing down any time soon. Instead, they just go to show what can happen when two intelligent companies combine forces, and how even a small online shoe retailer can become one of the largest companies in the world, just so long as it plays its ecommerce and customer service cards right.

Need even more info? Take a look at this infographic we’ve included below.

Zappos played a big role in shaping ecommerce into what it is today, and was the original purveyor of hassle-free returns. Here's how it became king on Amazon.

Turn visitors into conversions with ReadyCloud CRM powering your customer relationships. We think all online retailers deserve a cross-channel CRM. That’s why the first 2 weeks are on us!