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Amazon Acquires Zappos

     
10:39 am on Jul 23, 2009 (gmt 0)

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Amazon Acquires Zappos [nytimes.com]
The companies announced on Wednesday that Amazon was acquiring Zappos, based in Henderson, Nev., for 10 million shares of Amazon stock, worth nearly $900 million at its current level.

Amazon also said it would give Zappos employees an additional $40 million in cash and stock.

The acquisition is the largest in Amazonís history.

10:49 am on July 23, 2009 (gmt 0)

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when I read that news last night I was very happy for all my friends at Zappos and Amazon. Great fit, both great companies. Amazon is one of the few early internet companies that "get it". As they sell physical products they will never be a fad. And with Amazon's relationship with UPS and the super-cheap shipping they pay, they can afford to ship things were normally profits wouldn't be there to be able to do so. Watch Amazon buy Netflix next, another great company!
10:59 am on July 23, 2009 (gmt 0)

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While I agree that they are both great companies, I think that these are bad news for both consumers and web publishers.
11:07 am on July 23, 2009 (gmt 0)

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Zappo's is fantastic, and Amazon is smart. a brilliant acquisition IMHO. Congratulations to all you Zappo's employees!

>> I think that these are bad news

makeupalley, can you elaborate?

3:34 pm on July 23, 2009 (gmt 0)

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So what happens to Amazon's startup shoe operation, Endless.com?
3:40 pm on July 23, 2009 (gmt 0)

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endless.com gets decent traffic (770k visits) relative to zappos 4.5 million. Hopefully they'll keep it running. It sounds like amazon will treat zappos fairy hands off.
4:07 pm on July 23, 2009 (gmt 0)

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I personally think this is a bad move for

1. Us retailers

2. Customers

For #1, it just seems Amazon is the big gorilla in the room and they are slowly monopolizing the market in all areas. We recently got an email that said they could get the product we sell on amazon for $30 and free shipping. We pay more than $30 getting it wholesale and then mark it up and also add shipping. I told her there was no way we could compete on price, but our service would far exceed that of amazon. Of course we lost her.

For the customer, as amazon gobbles up more and more there is less and less competition. Less competition means higher prices, lower customer service, and an overall less competitive market.

6:11 pm on July 23, 2009 (gmt 0)

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For the customer, as amazon gobbles up more and more there is less and less competition. Less competition means higher prices, lower customer service, and an overall less competitive market.

yep

I think that these are bad news

Bad for small business, good for Amazon maybe, the way I see it, who knows
8:55 pm on July 23, 2009 (gmt 0)

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I just hope Zappos can integrate with Amazon while still retaining the great customer service that has allowed them to grow to being worth $800,000,000.00 to Amazon.
9:21 pm on July 23, 2009 (gmt 0)

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Good pick-up for Amazon.

Here's the letter from Tony Hsieh to his Zappos.com employees:
[blogs.zappos.com...]

9:48 pm on July 23, 2009 (gmt 0)

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For the customer, as amazon gobbles up more and more there is less and less competition. Less competition means higher prices, lower customer service, and an overall less competitive market.

If AMZN keeps swallowing companies, then it will be bad for other retailers. It's like a Wal Mart moving into a medium sized town where the hardware store, local pharmacy and other smaller businesses go under cause they can't compete on price. Individual merchants may still compete within the Amazon marketplace (or Ebay or Overstock or elsewhere for that matter).

I don't think it will be bad for the consumer unless the consumer drew their paycheck from a company that could no longer compete with Amazon on price. It would be rather odd for AMZN to raise prices, though of course they could. It seems like Bezos prides himself on efficiency and savings for the consumer rather than trying to get a monopoly so he can raise prices.

6:55 am on July 24, 2009 (gmt 0)

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makeupalley, can you elaborate?

I believe that the background of this is the belief that merges (acquisitions) are usually hurting end consumers as the competition lessens - which makes sense to me. I personally don't like situations when 2 make 1. That is mostly when the acquired either is in trouble, or looks into own (read personal) interest only, aka, I get millions from this action, I'm done for my life (and of my grandchildren) - no big picture, that is, consumer side.
I guess feelings play a big role in such comments.

10:55 am on July 24, 2009 (gmt 0)

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zappos.com has some excellent SEO techniques in use, some of which are very subtle, check them out before Amazon makes changes!

I've never purchased anything from Zappos but I don't see it being a bad merger for consumers. Even with Zappos under the Amazon umbrella there is no room to gouge customers, if they try the competition closes the gap (or enlarges it).

Edit: 900 million for a website and brand name is absurd, both can be re-created, had to say it.

2:11 pm on July 24, 2009 (gmt 0)

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If you are not familiar with Zappos, know they have tremendous customer service. I have very difficult-to-fit feet. I have to try on a lot of shoes. Local retailers seldom stock my size and never in anything high-quality. "We can order it for you, but we will not take it back."

Zappo takes it back. Even after some time, they take it back. I can get shoes that fit.

I'm a big fan of Amazon. I buy a lot from them. If Zappos becomes just another place to buy shoes, it's going to be heart-breaking. And my feet are going to hurt, too.

4:12 pm on July 24, 2009 (gmt 0)

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The problem is small online retailers that want to sell brand name products without adding value. If you're simply trying to compete on price with Amazon you're not a good business person, it's that simple. Walmart has been around for years, but a lot of small business are completely unaffected. Of course the weak do go out of business due Walmart, Best Buy, and the like, but I've purposely shopped at smaller brick and mortar retail shops when I needed support, extensive pre-sale information of some other level of personal interaction I felt was required. Why should I buy online from a smaller site that charges more money and doesn't offer any other benefit?
9:16 pm on July 27, 2009 (gmt 0)

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Can I play Devil's Advocate? Good. I was going to anyway, that is if we're all done looking at the NEGATIVE side of this...

What if, sure it's a big theoretical leap, Amazon manages to take the good things some of us are fearing will disappear from Zappos, and incorporate them into their overall scheme? (Read: Amazon improves customer service to near-Zappos levels -- any customer service would be an improvement on Amazon, but how many people have really had difficulty?). What if Amazon isn't buying just a domain and brand, but is purchasing CRM and skilled management with proven techniques and vast experience? What if this is what causes the "mom and pop shops" to go under...better prices and the same service. Still upset then?

Just curious... :o)

 

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