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The REAL reason Amazon bought Zappos

July 30, 2009

Amazon.com is one of my three favorite retailers. And I’m an intensely brand-loyal customer. Just ask the checkout clerk at Vons or the electronics manager at Target.

So, naturally, when I heard that Amazon bought Zappos, I was intrigued. I found an interesting article on Mashable about why Amazon bought Zappos, so I dove right in.

Here are the four key takeaways from that piece:

1. Zappos has a lot of growth potential

2. Zappos has a one-of-a-kind culture that has bred it’s success. It’s also one that no company, even Amazon, can easily replicate.

3. Zappos is known for its legendary customer service. Amazon thinks this is an asset in the future.

4. Amazon is buying Zappos for its people – its leadership and its employees.

A couple people I polled agreed with the article. But surpisingly, it wasn’t about the growth potential. It was about the customer service, the culture and the people. So, if you believe this, Amazon is buying Zappos to get access to their culture. They want to get access to the brand equity.

Let’s take a step back. Amazon spent close to a billion dollars to buy “culture?” Maybe if Amazon was run by Dennis Kozlowski. What Amazon is doing here is positioning its growth. The company is buying  a revenue stream that they did not have access to previously. And it’s a brilliant positioning model.

Amazon, primarily, is a media sales company. They sell much more than that, but at its heart, Amazon.com is still a place you go to buy Books, CDs, DVDs and Video Games.

Zappos is the leading online retailer of shoes. It doesn’t take a big leap of faith to assume that, given the proper economic funding (Amazon) they could become the largest online retailer of Clothing. This is Amazon’s goal. Zappos may have an outstanding corporate culture. But Jeff Bezos didn’t plan a billion dollar purchase just so his management team could spend a week camping with the Zappos guys.

Bezos can now invest in Zappos to grow the clothing business, which would never have been a core revenue stream for Amazon. And, he can keep Amazon (the website) positioned as the dominant media retailer while growing Amazon (the corporation) into an unassailable position as the dominant e-commerce site in all channels.

And I don’t think Amazon is done yet. It wouldn’t surprise me to see Amazon become more of a conglomerate. Amazon already sells the majority of the popular products sold online, but one things for sure, its growth is just starting.

Follow Devin on Twitter: www.twitter.com/devinkunysz

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2 Comments leave one →
  1. Ian permalink
    July 30, 2009 4:01 pm

    whoever wrote the first article is an asshole with a dildo in it. The only reason Amazon bought Zappos was because their clothing sales have been terrible so they bought a proven money making site to try and make up for it.

    People put way to much thought into these things, 99% of the time it comes down to money. Why did Apple chose AT&T over Verizon for the iPhone even though Verizon has much better customer service? Because AT&T offered them more money. The CEOs are responsible to only their Boards and their stockholders, that’s it.

    Once again another reason 99% of blogs are retarded. That guy had no idea what he was talking about.

  2. Devin permalink*
    July 30, 2009 4:03 pm

    Who What Where When & Y: Proudly standing above 99% of blogs…

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