Zappos is an Amazon subsidiary acquired by Amazon in 2009 for over a billion dollars. Jeff Bezos explained at the time of the acquisition, “Zappos is a customer-focused company; we see great opportunities for both companies to learn from each other and create even better experiences for our customers.” Iconic entrepreneur Tony Hsieh founded Zappos.
| Detail | Description |
|---|---|
| Company | Zappos.com, Inc. |
| Ownership Structure | Wholly owned subsidiary |
| Parent Company | Amazon.com, Inc. |
| Acquisition Date | November 2009 |
| Founding Date | July 12, 1999 |
| Founders | Nick Swinmurn, Tony Hsieh, Alfred Lin |
| Headquarters | Las Vegas, Nevada, USA |
| Primary Business | Online retailing of shoes, clothing, and accessories |
| Strategic Goals | Enhancing customer experience, expanding product offerings, maintaining a unique company culture, and leveraging Amazon’s logistics and technology infrastructure |
Additional Ownership Details
- Corporate Structure and Ownership: Zappos is a wholly owned subsidiary of Amazon.com, Inc. Amazon acquired Zappos in November 2009 for approximately $1.2 billion in Amazon stock. This acquisition was one of Amazon’s largest at the time and allowed Zappos to maintain its independent operations while benefiting from Amazon’s vast resources, logistics capabilities, and technology infrastructure. Zappos has continued to operate under its own brand, preserving its distinctive culture and customer-focused approach.
- History and Evolution: Zappos was founded in 1999 by Nick Swinmurn and joined by Tony Hsieh and Alfred Lin shortly after its inception. The company initially focused on selling shoes online and quickly became known for its exceptional customer service and generous return policy. Zappos expanded its product offerings to include clothing, accessories, and other lifestyle products, establishing itself as a leading online retailer. The company’s success was largely attributed to its commitment to customer satisfaction and the creation of a unique company culture that emphasized employee empowerment and innovation.
- Business Model and Revenue Streams: Zappos operates as an online retailer with a business model centered around providing a wide selection of products and delivering an outstanding customer experience. The company’s revenue is generated through the sale of shoes, clothing, and accessories from a variety of brands. Zappos offers competitive pricing, a comprehensive selection, and a customer-friendly return policy, including free shipping and returns. This customer-centric approach, coupled with a strong focus on customer service, has earned Zappos a loyal customer base and contributed to its financial success.
- Product Offerings and Services: Zappos offers a diverse range of products, including shoes, clothing, bags, accessories, and home goods. The company provides an extensive selection from various brands, catering to a wide array of customer preferences and needs. Zappos is known for its user-friendly website and mobile app, which feature advanced search capabilities, detailed product descriptions, and customer reviews to assist shoppers in making informed purchasing decisions. Additionally, Zappos emphasizes fast and reliable shipping, leveraging Amazon’s logistics network to fulfill orders efficiently.
- Unique Company Culture and Customer Service: Zappos is renowned for its unique company culture, which is centered around employee satisfaction, empowerment, and creativity. The company’s culture is guided by ten core values that promote transparency, innovation, and a positive work environment. Zappos’ commitment to exceptional customer service is reflected in its policies, such as a 365-day return policy and a focus on creating a personalized shopping experience. This dedication to service excellence has been a key differentiator for Zappos in the competitive e-commerce landscape.
- Integration with Amazon Ecosystem: As a subsidiary of Amazon, Zappos benefits from access to Amazon’s vast logistics and technology infrastructure. This integration allows Zappos to offer efficient shipping, inventory management, and customer service capabilities. While maintaining its independent brand identity, Zappos leverages Amazon’s expertise in supply chain management and e-commerce technology to enhance its operational efficiency and customer experience. The partnership also provides Zappos with opportunities to explore new product categories and expand its market reach.
- Leadership and Governance: Zappos was led by Tony Hsieh as CEO until his retirement in August 2020. Under his leadership, Zappos emphasized innovation, customer satisfaction, and a strong company culture. After Hsieh’s departure, Kedar Deshpande took over as CEO, continuing to build on the company’s core principles and growth strategy. Zappos’ governance structure aligns with Amazon’s broader objectives while maintaining its distinct brand identity and operational independence. The company’s leadership prioritizes transparency, employee empowerment, and customer-focused innovation.
| Aspect | Description | Analysis | Examples |
|---|---|---|---|
| Products and Services | Zappos offers a wide range of products, primarily focusing on footwear, clothing, and accessories for men, women, and children. The company provides a vast selection of brands, styles, and sizes, including popular and niche options. Zappos also offers customer-centric services such as free shipping, a generous return policy, and 24/7 customer support. | Zappos’ primary revenue source is the sale of footwear, clothing, and accessories. The company’s extensive product selection and commitment to customer satisfaction differentiate it from competitors. Free shipping, hassle-free returns, and exceptional customer support contribute to its reputation for exceptional service. Zappos’ diverse brand offerings cater to a broad customer base. | Footwear, clothing, accessories, men’s fashion, women’s fashion, children’s fashion, brand diversity, extensive product selection, free shipping, hassle-free returns, 24/7 customer support, exceptional service, customer-centric approach. |
| Revenue Streams | Zappos generates revenue primarily through the sale of footwear, clothing, and accessories. Customers make purchases through the company’s e-commerce platform. Revenue also comes from various sources, including premium memberships like Zappos VIP, partnerships, and advertising. | The primary revenue source for Zappos is the sale of fashion-related products through its e-commerce platform, reflecting its position as an online retailer. Revenue diversification includes premium membership fees and potential income from partnerships and advertising. Zappos’ customer-centric approach contributes to customer loyalty and repeat business. | Revenue from fashion product sales, e-commerce platform, premium memberships (Zappos VIP), partnerships, advertising, revenue diversification, customer loyalty, repeat business. |
| Customer Segments | Zappos caters to a diverse customer base that includes individuals and families seeking footwear, clothing, and accessories for various occasions. The company appeals to fashion-conscious consumers, as well as those looking for comfort and functionality. Zappos’ brand selection spans from affordable options to luxury and designer labels, accommodating different budgets and tastes. | Zappos primarily serves individuals and families searching for fashion items, footwear, clothing, and accessories for various needs and occasions. The brand appeals to fashion-conscious consumers as well as those prioritizing comfort and functionality. The diverse range of brands and price points caters to customers with varying budgets and style preferences. | Individuals, families, fashion-conscious consumers, comfort-focused consumers, diverse fashion needs, diverse brand selection, varying budgets, style preferences. |
| Distribution Channels | Zappos distributes its products exclusively through its e-commerce platform. Customers visit the website or use the mobile app to browse, select, and purchase fashion items. The company offers user-friendly online tools, filters, and recommendations to assist customers in finding products that match their preferences. | Zappos’ distribution channel is primarily its e-commerce platform, which serves as the sole avenue for customers to explore, select, and purchase fashion items. User-friendly online tools, filters, and recommendations enhance the shopping experience and encourage customer engagement. | E-commerce platform, website, mobile app, user-friendly tools, filters, recommendations, customer engagement, online shopping experience. |
| Key Partnerships | Zappos collaborates with fashion brands, designers, and manufacturers to secure a diverse and extensive selection of products. The company may form partnerships with delivery and logistics providers to ensure efficient shipping and order fulfillment. Zappos may also explore advertising and marketing partnerships to expand its customer reach and promote featured brands. | Collaborations with fashion brands and manufacturers are essential for sourcing a broad and varied product range. Partnerships with delivery and logistics providers contribute to timely and efficient order fulfillment. Advertising and marketing partnerships help extend the brand’s reach and promote featured products and brands. | Fashion brand collaborations, manufacturer partnerships, delivery and logistics provider partnerships, advertising collaborations, marketing partnerships, product range diversification, efficient order fulfillment, brand promotion. |
| Key Resources | Key resources for Zappos include its extensive e-commerce platform, a vast inventory of fashion products, strategic partnerships with brands and suppliers, a dedicated customer support team, a user-friendly website and mobile app, and a strong reputation for customer service excellence. Zappos’ investments in technology and logistics are critical to its operations. | Zappos’ resources encompass a robust e-commerce platform, an extensive inventory of fashion products, strategic partnerships with brands and suppliers, a dedicated customer support team, a user-friendly online interface, and a well-established brand reputation for exceptional customer service. Investments in technology, logistics, and inventory management are crucial for maintaining competitiveness. | E-commerce platform, fashion product inventory, brand and supplier partnerships, customer support team, user-friendly online interface, exceptional customer service, technology investments, logistics investments, inventory management, competitiveness. |
| Cost Structure | Zappos incurs various costs associated with its operations, including expenses for purchasing inventory, website maintenance and development, marketing and advertising campaigns, employee salaries and benefits, order fulfillment and shipping, customer support operations, and administrative overhead. Investment in marketing and advertising is a significant cost for customer acquisition and brand promotion. | Costs related to Zappos’ operations include inventory acquisition expenses, website maintenance and development costs, marketing and advertising campaign expenses to attract and retain customers, employee salaries and benefits, order fulfillment and shipping costs, customer support costs, and administrative overhead. Marketing and advertising costs play a crucial role in acquiring and retaining customers and promoting the brand. | Inventory acquisition costs, website maintenance and development expenses, marketing and advertising campaign costs, employee salaries and benefits, order fulfillment and shipping expenses, customer support costs, administrative overhead, marketing and advertising for customer acquisition and brand promotion. |
| Competitive Advantage | Zappos’ competitive advantage stems from its extensive product selection, user-friendly e-commerce platform, commitment to customer satisfaction and exceptional service, and a broad range of brands and price points. The company’s customer-centric approach, including free shipping and hassle-free returns, fosters customer loyalty. Zappos’ brand reputation for service excellence is a valuable asset. | Zappos’ strengths include an extensive and diverse product selection, a user-friendly e-commerce platform, an unwavering commitment to customer satisfaction and exceptional service, and a broad range of brands and price points. The company’s customer-centric approach, including free shipping and hassle-free returns, fosters strong customer loyalty. Its brand reputation for service excellence is a significant competitive advantage. | Extensive product selection, user-friendly e-commerce platform, customer satisfaction commitment, exceptional service, broad brand and price range, customer-centric approach, free shipping, hassle-free returns, customer loyalty, brand reputation, competitiveness. |
The Acquisition of Zappos by Amazon Explained
- Acquisition by Amazon: Zappos, the customer-focused online shoe and clothing retailer, was acquired by Amazon in 2009 for over a billion dollars.
- Customer-Centric Philosophy: Zappos was renowned for its exceptional customer service and dedication to creating a positive customer experience, which aligned well with Amazon’s customer-centric approach.
- Entrepreneurial Founder: Zappos was founded by iconic entrepreneur Tony Hsieh, who played a crucial role in shaping the company’s customer-centric culture.
- Synergistic Opportunities: Jeff Bezos, the CEO of Amazon, emphasized that the acquisition presented great opportunities for both companies to learn from each other and improve customer experiences.
- Integration with Amazon: Post-acquisition, Zappos continued to operate as an independent brand, maintaining its unique identity and customer-focused philosophy.
- Shared Values: Both Amazon and Zappos shared a commitment to providing exceptional customer service, making the acquisition a strategic fit to reinforce Amazon’s existing customer-centric strategy.
- Expanding Amazon’s Portfolio: The acquisition of Zappos was part of Amazon’s strategy to diversify its portfolio by acquiring successful e-commerce companies with a strong customer base.
- Maintaining Independence: Amazon allowed Zappos to maintain its distinctive company culture and customer-focused approach, ensuring continuity and retaining its loyal customer base.
- Impact on Amazon’s Growth: The acquisition of Zappos contributed to Amazon’s expansion into the online retail market for footwear and clothing, further solidifying Amazon’s position as an e-commerce giant.
- Learning and Collaboration: The integration of Zappos within Amazon provided an opportunity for knowledge exchange and collaboration, benefiting both companies and enhancing their overall customer experiences.
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