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Yesterday Amazon shocked the world by acquiring Zappos in exchange for $847,000,000 in cash and stock. Why the hell would Amazon buy a company like Zappos?
Does Zappos own a superior supply-chain system? No.
Does Zappos offer better products than Amazon or it's subsidiary, Endless? No.
Does Zappos offer lower prices that could potentially cut into Amazon's sales? No.
Amazon bought Zappos because Zappos offers a transcendental customer experience powered by a company culture that is impossible to replicate. Zappos defines its culture by 10 core values:
1) Deliver WOW Through Service
2) Embrace and Drive Change
3) Create Fun and A Little Weirdness
4) Be Adventurous, Creative, and Open-Minded
5) Pursue Growth and Learning
6) Build Open and Honest Relationships With Communication
7) Build a Positive Team and Family Spirit
8) Do More With Less
9) Be Passionate and Determined
10) Be Humble
Zappos is a customer-centric company that defines its brand through its relationship with its customers. It nurtures these relationships by creating delightful interactions at every touchpoint. It is one of the first companies that offered free shipping and free returns to its customers. It is probably the only company in America that offers a 365-day return policy. Zappos also offers 24/7 customer service via telephone and email and its reps are trained to spend as much time as necessary on the phone to solve a customer's need, even if the support call takes several hours to resolve. Zappos cares so deeply about its customers that customer service reps are encouraged to help them find products online that Zappos itself does not carry. This customer-centric philosophy creates a delightful customer experience that forges deep brand loyalty with its customers.
Is culture and a superior customer experience worth $847,000,000? Amazon certainly thinks so. Zappos doesn't produce its own products and only owns one warehouse, so the bulk of the acquisition cost is for the Zappos brand. Amazon is smart enough not to tinker with what works, so expect it to flex its marketing muscles and push Zappos into the mainstream once this deal closes in the fall. You can read Zappos CEO Tony Hsieh's open letter to employees about the merger here and watch Jeff Bezos announcement to Zappos employees embedded below.
