Today the CEO of Zappos.com, Tony Hsieh, announced that his company had been bought by Amazon.com for 10 million shares of Amazon (AMZN) stock. At today’s stock price, this deal is worth over $800 million. An additional $40 million in cash and restricted stock is to be given to Zappos employees.
Tony Hsieh announced the deal via his Twitter account, @zappos, which has over one million followers. In a detailed letter to his employees on the company blog, Tony outlined the particulars of the deal and what it means to Zappos employees. Basically, he assured people that the Zappos brand will stay the same, in the same location, with the same people behind it. Both Zappos and Amazon are committed to customer service and are widely recognized as leaders in online customer satisfaction.
Now that these two online giants have merged, what does this mean for the world of online retail? Both of these companies are leaders in customer satisfaction with incredibly large and loyal customer bases. Now that they are working together, these companies are poised to expand and dominate new online markets. Amazon was already by far the largest online retailer, with over $19 billion in revenue in 2008. Zappos was not too far behind, with over $1 billion in sales last year.
With a fresh influx of capital from Amazon, Zappos is well on its way to spreading its customer-based philosophy to any and all online retail markets. I remember Tony Hsieh even talking about starting a Zappos airline someday. That someday may be happening much sooner now.
In his blog post, Tony Hsieh mentioned that Zappos was approached by Amazon out of the blue. So who’s next in line for an Amazon acquisition? My money is on Netflix.
In case you aren’t familiar with Zappos and their unique way of conducting business online, check out this insider’s look that aired on Nightline last year.
