Amazon buys Zappos to Kick Game Plan into High Gear
By Azam on July 22, 2009
Amazon the leading online retailer tries on Zappos for size 807M for the perfect fit for online retail apparel. Amazon has gone past the books in online retail and moving beyond the endless pursuit of expanding retail footprint.
Founded in 1999, Zappos is a rare specialty Internet retailer to have survived in the wake of the dot-com implosion mainly focused on footwear. The Las Vegas-based company has made a name for itself in customer service by offering free shipping and free returns. Zappos also has a unique work culture that is attributed to the success of the company.
The acquisition is seen as a natural fit due to similarity of corporate cultures focused on customer centric and long term strategy in online retail market.
“Zappos is a customer focused company,” said Amazon CEO Jeff Bezos in a statement.
Online apparel, footwear and accessory sales amount to about $23 billion in annual sales, ahead of personal computers at around $16 billion and consumer electronics at around $11 billion, according to Forrester.
Amazon has historically shied away from large acquisitions, preferring smaller to mid-sized deals. In the past, the company has bought online audio-book Web site Audible Inc. for approximately $300 million and Chinese retailer Joyo.com Ltd. for about $75 million.
The deal reaffirms the importance to Amazon of selling physical goods, where the company got its start by selling books. More recently, Amazon has created buzz for itself with the Kindle, an electronic book reader that is part of a growing push to sell downloadable media.
Amazon said it will swap shares equal to about $807 million to acquire Zappos. Amazon said it will additionally provide Zappos employees with $40 million in cash and restricted stock units as part of the deal.
Zappos, which is backed by venture capital firms including Sequoia Capital, has said its site had more than $1 billion in gross merchandise sales in 2008.
Jeff Bezos on Zappos
Categories : TechTags : , Amazon, Jeff Bezos, Kindle, Michael Moritz, Sequoia, sequoia capital, Tony Hsieh, Zappos