I understand Zappos selling out to Amazon (even the Amazon logo, which leads from A to Z, makes sense of it) but the news still depresses me. Zappos is a cause as well as a brand. That cause is relationship. As Wikipedia (currently) puts it,
Zappos uses a loyalty business model and relationship marketing. The primary sources of the company’s rapid growth have been repeat customers and numerous word of mouth recommendations. In 2005, the chairman reported that 60% of customers were repeat buyers.
Think about the word “company.” At Dictionary.com, the noun is said to mean these things:
- a number of individuals assembled or associated together; group of people.
- a guest or guests: We’re having company for dinner.
- an assemblage of persons for social purposes.
- companionship; fellowship; association: I always enjoy her company.
- one’s usual companions: I don’t like the company he keeps.
- society collectively.
- a number of persons united or incorporated for joint action, esp. for business: a publishing company; a dance company.
- (initial capital letter) the members of a firm not specifically named in the firm’s title: George Higgins and Company.
And that’s before we get down to military, governmental and other meanings.
Note that the business meanings start at #7. Note the convivial qualities of all the numbered meanings. Zappos has that convivial nature, more than any other big company retailing clothing online. You get the sense that you can relate to these people, because they seem to have a reason for being that goes beyond being the cheapest and most convenient means for choosing goods, paying for them, and having them shipped to you. That’s Amazon’s business. It’s different.
So I’m sure there is synergy there. But synergy alone does not a great acquisition make.
I wonder, now that (as the press release says) “Amazon will provide Zappos employees with $40 million in cash and restricted stock units” — in addition to whatever stockholding Zappos employees get in the form of Amazon stock (the sum of all shareholders and options is 10 million Amazon shares) — if Zappos’ soul and mission will survive the acquisition.
I also wonder what kind of hit the whole subject of relationship, which is so highly potentiated (read: absent, though it shouldn’t be), will take.
Tony Hsieh’s letter to employees (about 100 of them, it says) is reassuring, as is the Jeff Bezos video.
Hope it works out.
[Later…] Alexander Haislip has a financial angle on the deal.