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About Zappos.com Category-Online shoe and apparel shop (Retail)

Place- Based in Henderson, Nevada.

Employees- 1500+

Official Website-Zappos.com

Founder-Nick Swinmurn (1999)

Acquired By-Amazon.com (July 2009)

Company HistoryIn late 1998, Nick Swinmurn, a 26-year-old marketing manager for an online car-buying

service, went to a San Francisco area shopping mall to purchase a pair of Airwalk shoes but could not find any in the color, style and size he wanted. Swinmurn turned to the Internet but was frustrated by the lack of online footwear-only retailers: “There were a bunch of little sites but nothing that jumped out at you,” he said. His experience inspired him to create an online footwear retail site, and in June, 1999, Swinmurn launched shoesite.com which was renamed Zappos.com because, he explained, it was easy to remember and there was a “recognizable relation” to zapatos, the Spanish word for shoes.”

Products

Zappos’ primary selling base is shoes, which accounts for about 80% of its business. There are currently about 50,000 varieties of shoes sold in the Zappos store, from brands like Nike, Ugg boots, and Steve Madden heels. They also serve the niche shoe markets, including narrow and wide widths, hard-to-find sizes, American-made shoes, and vegan shoes. In 2004, they launched a second line of high-end shoes called Zappos Couture.

In 2007, Zappos expanded their inventory to include clothing (including petite, big and tall, and plus sizes), handbags, eyewear, watches, and kids’ merchandise, which currently account for 20% of annual revenues. Zappos expects that clothing and apparel will bring in $1 billion worth of revenue by 2015, as the apparel market is four times the size of the footwear market. Hsieh states that "our whole goal is we want to build the best brand of customer service. Hopefully, 10 years from now, people won’t even realize that we started selling shoes."

EvolutionZappos initially secured inventory through independent shoe stores, but by October 1999,

the Company had begun creating direct relationships with footwear manufacturers. By the end of 2000, Zappos offered more than 100 brands, including Bostonian, Sperry, Dexter, GH Bass and Tommy Bahama. The manufacturers agreed to ship orders directly to Zappos’ customers so the company could avoid carrying inventory.

Late 90s

In 1999, there were more than 1,500 retailing sites on the Internet with footwear offerings—though most were apparel retailers stocking a handful of complementary shoe styles.5 U.S. online shoe sales were just under $48 million—less than one tenth of 1% of the $37 billion U.S.

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footwear market. By contrast, mail-order catalogue sales were 6.4% of U.S. footwear sales. The online footwear industry gained a higher profile after Nordstrom joined its ranks. The high-end retailer had launched its own apparel Web site in 1998 and learned that shoes sold disproportionately well online (30% of sales), compared to retail store sales (20%). As a result, Nordstrom launched its own dedicated shoe site in the summer of 1999 with$17 million advertising campaign. By the end of 1999, Zappos had begun to institute services such as free shipping, which fuelled growth. Indeed, from its inception, Zappos focused on delivering outstanding customer service to make the online shopping experience as easy and as close to a visit to a retail store as possible. For example, visitors could print a shoe sizing template, or initiate live online chat sessions with product experts. In addition, each shoe was photographed from nine different angles by Zappos photographers. Zappos employees wrote detailed product descriptions for each shoe that were far more descriptive of the style, fit, and materials than those prepared by the shoes’ manufacturers.

Early 2000s

By 2000, Zappos was billing itself as the world’s largest shoe store with 150 brands and 400,000 pairs of shoes in stock. Zappos had begun to switch from having manufacturers ship directly to its customers to carrying inventory. In January 2000, the company secured $1.1 million in venture capital funding from Venture Frogs, an investment and incubation firm that Hsieh and Lin had formed two years earlier. Venture Frogs specialized in early-stage Internet, e-commerce, information and telecommunications technology companies that were entering a “phase of unusual growth.” Hsieh and Lin knew something about such companies, having started, at the ages of 24 and 25, respectively, LinkExchange, an advertising network that they sold to Microsoft for $265 million in November 1998.12

When PC Data Online released its 2000 annual ranking of the top 10,000 e-commerce Web sites (segmented by category), Zappos was honoured as the highest ranking “pure-play” online footwear retailer. Zappos offered a larger selection of footwear than any other shoe store, online or offline. Zappos sales were outpacing online sales of retailers such as Land’s End, J. Crew and Abercrombie and Fitch. The site’s overall ranking (1,134) indicated a 0.9% reach, which meant that almost 1% of all Internet users visited Zappos’ site during June 2000. The investment community, however, was growing disenchanted with online footwear retailers. Some analysts claimed that the online footwear industry was little more than a high-tech catalogue, serving to supplement sales for established brick-and-mortar chains or as a means for customers to research future in-store purchases. “The footwear market is not a hotbed of activity,” said one analyst in 2001

Hsieh joined Zappos as co-CEO (with Swinmurn) in May 2001, noting that Zappos was “the most fun and the most promising” of all the companies he had encountered as a venture capitalist and would probably generate the greatest return for Venture Frogs. His instincts were good. By year’s end, Zappos had grown to $8.6 million in gross merchandise sales. In 2002, he announced a financial goal for Zappos: to grow to $1 billion in gross sales by 2010.19 In 2003, Hsieh became sole CEO and Swinmurn became chairman. By 2005, Zappos had outgrown its San Francisco headquarters. The company employed 100 call centre staff and was in search of a less expensive base of operations. Las Vegas, Nevada, emerged as the best option because wages were lower and workers plentiful. In addition, the city was considered a good fit for the Zappos

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lifestyle. After receiving $35 million in investment capital from Sequoia Capital in 2005, Zappos moved its headquarters to Las Vegas.

Soon before Swinmurn left to pursue other interests, Lin joined as CFO, later taking up the roles of Chairman and COO as well. In the meantime, the online footwear retailing industry had grown to $2.9 billion in 2006, compared with just $954 million in 2002, and was projected to reach $5.2 billion by 2010.21 Zappos, a $597 million company in 2006, faced new competition from mega-retailers: Gap Inc.-backed Piperlime.com and Amazon.com, which owned Endless.com, both launched footwear sites in early 2007. By 2008, Zappos had become a $1 billion retailer and reported net income of $10.8 million on 2008 net revenue of $635 Million.The Company employed 700 “team members,” as employees were called, in its Nevada office: 300 in its call centre, 200 in merchandising and the balance in supporting departments ranging from legal to accounting.

Organizational Structure of Zappos.com  

Chairman and Founder-Nick Swinmurn

Vice President- Lisa Vagge(Marketing) Fred Mosler(Merchandising)

CEO -Philip Falcone

Board of Directos- Robert Leffler Lap Chan Lawrence Clark Thomas Hudgins Keith Hladek

COO- Peter Jenson

CFO- Francis McCarron

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Key Events In 2007, Zappos acquired 6pm.com, which has bargain shoes, clothing, and accessories.

In 2008, Zappos launched Zappos Insights, which aims to help other businesspeople refine their company culture and customer service. For $40/month, participants are offered access to a subscription video service that lets companies ask questions to Zappos employees. Zappos Insights also offers a two-day boot camp where participants visit the headquarters and have meetings with Zappos executives..

Acquisition by Amazon

In 2008, Zappos hit $1 billion in annual sales, two years earlier than expected (one year later, they fulfilled their other long-term goal, debuting at #23 on Fortune’s Top 100 Companies to Work For).In 2009, Zappos started exploring an acquisition to Amazon. Within Zappos’ board of directors, two of the five—Hsieh and Alfred Lin—were primarily concerned with maintaining Zappos company culture, whereas the other three wanted to maximize profits in a down economy. Initially, Hsieh and Lin planned to buy out their board of directors, which they estimated would cost $200 million. In the midst of this, Amazon executives approached Zappos with the proposition of buying Zappos outright. After an hour-long meeting with Amazon CEO Jeff Bezos, Hsieh and Lin sensed that Amazon would be open to letting Zappos continue to operate as an independent entity, and started negotiations. On July 22, 2009, Amazon announced that it would buy Zappos for $940 million in a stock and cash deal. Owners of shares of Zappos were set to receive approximately 10 million Amazon.com shares, and employees would receive a separate $40 million in cash and restricted stock units. The deal was eventually closed in November 2009 for a reported $1.2 billion.

In 2013, Zappos will move their headquarters from Henderson, Nevada to the old city hall in Downtown Las Vegas. According to Hsieh, "I want to be in an area where everyone feels like they can hang out all the time and where there’s not a huge distinction between working and playing." The move was lauded by Las Vegas mayor Oscar Goodman who said "this will be a game changer for Southern Nevada. This move will bring about a critical mass of creative persons to the inner core of Las Vegas in addition to causing a significant shot in the arm for the economy and for new jobs."

2012 hacking incident

On January 16, 2012, the company announced that its computer system was hacked, compromising the personal information of 24 million customers. In response, the company required all of its customers to change their passwords on the site. The company also shut down its customer service phone lines, requiring its customers to email questions instead.

CSR Initiatives

In May 2010, 6pm accidentally priced all their merchandise at $49.95, including items like GPS navigators. They honoured the pricing glitch, taking a $1.6 million loss .Zappos sponsors the "Zappos Rock 'n' Roll Las Vegas Marathon and ½ Marathon," which draw 28,000 runners each year. They also sponsor the Zappos WCC basketball championships. During the tournament, Zappos hosts "Kidz Day," which outfits local Las Vegas kids with a new pair of

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shoes and an event t-shirt

.

Social media

In 2009, Zappos was awarded for the "best use of social media" by Abrams Research. CEO Tony Hsieh indeed encourages his employees to use social media networks to put a human face on the company and engage with customers, which especially coincides with core value #6: "Build Open and Honest Relationships With Communication.". Zappos employees maintain an active presence on:

Twitter: Zappos run its own Twitter microsite for its 500 employees registered on Twitter. Among them, Tony Hsieh is one of the 185th most followed person on Twitter with 1.85 million followers. Employees do not use their Twitter accounts to offer promotions or marketing pitches, but instead to show followers a little bit of the Zappos culture and to humanize the company. As an example, before going onstage for a tech conference, Hsieh tweeted: "Spilled Coke on left leg of jeans, so poured some water on right leg so looks like the denim fade." He also encourages customers to use Twitter to give positive as well as negative feedbacks.

YouTube aims to show how people works at Zappos. It helps its employees to “Create Fun and A Little Weirdness” (Zappos Core value number 3) and to “Build a Positive Team and Family Spirit” (Zappos Core value number 7). Zappos has increased its channel views five-fold to reach today 230K views. More than 2500 people have suscribed to the youtube.

Facebook allow to provide very rich contents -videos, photos, “behind the scene stuff”- to its 152,000 fans. Facebook helps fans to interact more easily than with the other networks (post some videos, comments, pictures). Zappos creates contests to get fans even more involved by giving away some products.

Corporate blogs: Zappos runs several covering all topics related to its business: CEO blog, COO blog, Couture blog, Fashion Culture blog, Inside Zappos blog. This blog culture allows even more the employees to show their passion and dedication to their job and helps customers to get Zappos' culture.

All the social networks are complementary for Zappos; none of them can be avoided. However, the "real" social media remains the telephone and the email, which are essential to get the best customer service.

Recognition

Zappos has been featured in many US based publications, including The New Yorker, USA Today, CNN, The New York Times, Inc. Magazine, The Washington Post, CBS News, The Los Angeles Times, The Chicago Tribune, and Forbes. They were named #23 to Fortune’s list of “Best Comp

Additional Lines of Business, Launched Between 2006 and 2009 Powered by Zappos 6pm.com Private label

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Management Style

Business Model

Zappos uses a loyalty business model and relationship marketing. The primary sources of the company's rapid growth have been repeat customers and numerous word of mouth recommendations. Of its customers, 75% are repeat buyer.

The company's customer service reputation has been augmented through viral spreading as well, as customer service expert Micah Solomon noted in 2010: "Shoe merchant Zappos has benefited from Internet wildfire. When Zappos offered special return shipping assistance, beyond their company policies...the good word about the company spread quickly throughout the blogosphere."

Zappos has a stated goal to offer "best service in the industry." Their service promotes such benefits as:

Free shipping both ways A 365-day return policy A 24/7 call centre

Company Culture and Core Values

Zappos places great emphasis on company culture and core values. Hsieh's belief is that "if we get the culture right, then everything else, including the customer service, will fall into place." The company publishes an annual 480-page "Culture Book," which is composed of two to three paragraph entries from employees describing Zappos' company culture. The entries are unedited, and a copy of the Culture Book is given to all employees.

Zappos applicants must go through two interviews: one for their professional aptitude and one for their personality, both equally important. In the personality interview, they are asked questions to see if they would fit in with Zappos culturally, like "how weird are you on a scale from 1-10" and "what is your theme song?" All newly hired employees except those at the Kentucky Fulfillment Centre, even executives, are required to undergo a 4-week customer loyalty training course, which includes at least 2 weeks of talking on the phone with customers in the call centre. After training, the new employees are offered $2,000 to quit, which weeds out people who would jump ship anyway and allows those who remain to make a public statement of commitment to their new employer. Over 97% turn down the offer.

Employees enjoy free lunches, no-charge vending machines, a company library, a nap room, and free health care. Each department has its own decor, ranging from rainforest themed to Elvis themed, and employees are encouraged to decorate their work spaces (for example, Hsieh’s desk, which is in the middle of a cluster of cubicles, features jungle vines and an inflatable monkey). Employees often lead spontaneous office parades, occasionally accompanied with cowbells, and managers are required to spend 10-20% of their working hours "goofing off" with employees outside of the office.

Zappos has ten core values, which define their culture, brand, and business strategies. They are:

Deliver WOW through Service

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Embrace and Drive Change Create Fun and A Little Weirdness Be Adventurous, Creative, and Open-Minded Pursue Growth and Learning Build Open and Honest Relationships With Communication Build a Positive Team and Family Spirit Do More With Less Be Passionate and Determined Be Humble

Customer service

The Zappos website states that "we've been asked by a lot of people how we’ve grown so quickly, and the answer is actually really simple... We've aligned the entire organization around one mission: to provide the best customer service possible." On average, Zappos employees answer 5,000 calls a day, and 1,200 e-mails a week (except in the holiday season, when call frequency increases significantly). Call centre employees don't have scripts, and there is no limit on call times. The longest call recorded was over five hours long.

Zappos employees are encouraged to go above and beyond traditional customer service. In particular, after a late night of bar hopping and closed room service, Hsieh bet a Sketchers rep that if he called the Zappos hotline, the employee would be able to locate the nearest late-night pizza delivery. The call centre employee, although initially confused, returned two minutes later with a list of the five closest late night pizza restaurants. Inc. Magazine notes another example when a woman called Zappos to return a pair of boots for her husband because he died in a car accident. The next day, she received a flower delivery, which the call centre rep had billed to the company without checking with her supervisor. Even though their website states that delivery will take between 2-5 business days; Zappos gives "surprise" free upgrades to overnight shipping for most customers.

HR Management and TrainingIn 2008, Roger Dana, training communications and process developer, and his team formal-

ized a pipeline: a process used to develop employees from entry-level to “reach the highest level of management.” The pipeline required that all employees undertake 225 hours of “core level” training; this included 160 hours of initial new hire/customer loyalty training as well as addi-tional courses on effective communication, coaching, overcoming conflict, and managing stress. The newest class was entitled, “Science of Happiness.” “I’ll admit, we went back to our desks and giggled a little bit when Tony asked us to develop a class on happiness,” said Dana, but he explained that Hsieh had spent a year researching the science of happiness and believed a class on the subject—which Hsieh defined as finding meaning and a larger purpose for life—would support the corporate culture.

“Zappos’ larger purpose should be about spreading happiness—delivering happiness to the world,” said Hsieh. Through the implementation of the pipeline, the company was highly trans-parent about the skills and courses employees were required to master in order to progress within the company. “We’re anon-hierarchical company,” explained Foley. “Everyone’s role is impor-

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tant and everyone has thesame foundation,” she said. Dana elaborated: “The pipeline sets the ex-pectation that anyone could potentially rise to senior management.” Indeed, after completing management training, managers could opt to undertake an additional 39 hours of leadership training, which included courses entitled “Inspiring Great Teams,” “Leadership Zappos Style” and “Cultivating Culture.” In addition, aspiring leaders were expected to teach either a pipeline or department course and deliver a presentation to Zappos employees, visitors or a local school.

SWOT Analysis of ZapposStrengths

 Effective communication

Innovation

Online growth

Loyal customers

Pricing

Unique products

Customer Service

Great shipping

 Low fixed cost

 Strong brand

Unique company culture

Weakness

Weak real estate

Not too many Locations, throughout the US 

Opportunities

Innovation

Online

Takeovers 

Threats

External changes (government, politics, taxes, etc)

Product substitution

External Changes would include job losts and disinterests of the actual produucts offered in the online store.

The possibility of acquisition by bigger companies.

Insights of Zappos

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Reason for zappos attrition-The most common reason given for voluntary resignation is that the employee is moving out of the Las Vegas area. Because there is a very constant flow of peo-ple to Las Vegas from all over the country (world?), you get a lot of people who just decide that they need to get back to their families. Another, related reason is that an employee’s spouse has taken a job elsewhere

Conversion Rate-According to our management team for Zappos CLT, Inc, conversion rates are actually not tracked, but if they were able to give a ballpark figure of conversion, an estimated 4% of orders are placed by customers calling in to customer service (ZCLT). The other 97% of customers place their orders online

Employee Turnover Rate-8.32%, In all of the industries which the Zappos Family is involved, the turnover rates are below industry averages. There is not one company-wide number, since it would include so many different industries. Even Zappos Fulfillment Centers and Zappos CLT maintain turnover rates that are lower than their industry's averages

Motivation-For the most part, the environment itself leads to motivated employees. Since we hire by our core values, team members know what to expect when coming into work. While mo-tivating team members is an important factor in leadership, the Zappos Family really focuses on empowering and inspiring people to excel. Even there are a few recognition programs that are used. Most of the programs involve peer-to-peer incentives like Zollars, or Zappos Dollars. Em-ployees can give each other Zollars for any action that they feel is deserving of recognition (If someone helps them carry boxes to their car or holds the door while their hands are full, or helps them to learn something they were having a hard time with, etc...)Zollars can be collected to spend in the Zollar Store - a collection of useful items located by the front door of the 2280 building. There is also an employee bonus program. This is also peer driven and culture based. For actions that deserve more recognition than Zollars, employees can award each other a $50 bonus

Financial Growth

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In 2001, Zappos more than quadrupled their yearly sales, bringing in $8.6 million. In 2002, they opened their own fulfilment centre in Shepherdsville, Kentucky. Advertising costs were minimal, and the company grew mostly by word of mouth. It was around this time that Hsieh and Zappos executives set long-term goals for 2010: achieve $1 billion in sales and receive inclusion on Fortune’s list of The Best Companies to Work For.

In 2003, Zappos reached $70 million in growth sales and abandoned drop shipping, which accounted for 25% of their revenue base. The decision was based on supplying superior customer service. In 2004, Zappos did $184 million in gross sales, and received their first round of venture capital, a $35 million dollar investment from Sequoia Capital. That same year, they moved their headquarters from San Francisco to Las Vegas.

Over the next three years, Zappos doubled their annual revenues, hitting $840 million in gross sales by 2007. They expanded their inventory to include handbags, eyewear, clothing, watches, and kids’ merchandise. Hsieh summarized this transition, saying "back in 2003, we thought of ourselves as a shoe company that offered great service. Today, we really think of the Zappos brand as about great service, and we just happen to sell shoes."

Exhibit 1 - Zappos Gross Sales by Year, 2000 to 2008 in $ Millions

Year Gross Sales in $ millions2000 1.62001 8.62002 322003 702004 1842005 3702006 5972007 8412008 1,014

Top Competitors of Zappos.com

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Foot Locker J. C. Penny Shoebuy.com PlanetAll

Exhibit 2- Market Value of Selected Online and Footwear Retailers, July 22, 2009, in $ Millions

Exhibit 3- Zappos Income Statement, 2007 to 2009, in $ Thousands

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Exhibit 4- Zappos Balance sheet

As of dec 31 As of june 302007 2008 2009

Assetscurrent assetsCash and cash equivalents 6,761 8,590 4,470Restricted cash 1,687 2,245 2,176Accounts receivable, net 8,461 6,772 5,039Inventory, net 161,988 168,131 176,918Deferred income taxes 12,267 15,890 15,890Prepaid exp and other assets 2,496 3,253 3,328Total current assets 193,760 204,881 207,821Property and equipment, net 44,286 48,962 49,069Deferred income taxes 3,098 708 708Intangible assets, net 4,405 8,646 8,296Other assets, net 705 2,075 1,860Total assets 246,254 265,272 267,754

Liabilities and stockholder's equity

Current liabilities:

Accounts payable 76,055 69,792 61,823Accrued and other liabilities 28,467 51,409 76,464

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Deferred income taxes 527 559 559Accrued sales returns 16,762 18,637 13,988Current portion of loan obligations 2,747 4,863 18,722Current portion of capital lease obliga-tions

1,051 1,490 3,046

Revolving line of credit 29,000 26,006 35,000Total current liabilities 154,609 172,756 209,602Deferred rent 1,883 1,514 1,467Deferred income taxes 3,418 2,870 2,870

Other long term liabilities 28,868 19,935 3,748Loan obligations, noncurrent 20,188 15,777 0

Capital lease obligations, noncurrent 1,809 1,702 3,734

Total liabilities 210,775 214,554 221,421Stockholders' equity:Convertible preferred stock 61,465 61,465 61,465Additional paid-in capital 2,092 6,557 8,275Accumulated deficit (28,092) (17,320) (23,423)Common stock 16 16 16Total stockholders' equity 35,479 50,718 46,333Total liabilities and stockholder's eq-uity

246,254 265,272 267,754

Acquisition of Zappos by Amazon

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Total merger consideration:

$838 million, minus $52 million for Zappos.com’s net debt as of March 31, 2009, plus the lesser of $35 million and the aggregate exercise price of all stock options and warrants outstanding and unexercised as of the closing of the merger, plus the aggregate exercise price of all stock options and warrants exercised between June 8, 2009 and the closing of the merger, minus the lesser of $15 million and Zappos.com’s transaction expenses incurred in connection with the merger.

Paying by Amazon shares:

The merger consideration will be paid in shares of Amazon.com common stock, except for payment of fractional shares in cash. The aggregate number of Amazon.com shares to be issued in connection with the merger…is equal to the total merger consideration divided by $81.09, which is the average of the closing prices of Amazon.com common stock for the 45 trading days ending July 17, 2009, and is about 10 million shares of common stock. In addition, Amazon.com will provide Zappos.com employees with $40 million in cash and restricted stock units for retention purposes.

Escrow amount:

10% of the total number of shares of Amazon.com common stock issuable to Zappos.com shareholders. On February 28, 2011, subject to any pending indemnification claims, sufficient shares will be released from escrow to reduce the escrowed amount to $40 million, which will remain in escrow and subject to certain categories of Amazon.com indemnification claims until the fourth anniversary of closing.

The shareholding structure of Zappos:

(i) 21,469,674 shares of company common ctock, (ii) 1,490,500 shares of series A preferred stock, (iii) 4,514,499 shares of series B preferred stock, (iv) 10,295,572 shares of series C preferred stock (v) 427,633 shares of series D preferred stock, (vi) 3,246,753 shares of series E preferred stock and (vii) 3,772,223 shares of series F preferred stock

Liquidation preferences:

60 million shares of common stock, $0.001 par value and 35,99 million shares of preferred stock, $0.001 par value, of which

1,550,000 shares have been designated series A preferred stock, with a liquidation preference of $0.10 upon consummation of the merger,

7,725,000 shares have been designated series B preferred Stock, with a liquidation preference of $0.1949 upon consummation of the merger,

17,300,000 shares have been designated series C preferred Stock, with a liquidation preference of $0.45273 upon consummation of the merger,

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650,000 shares have been designated series D preferred stock, with a liquidation preference of $0.7910 upon consummation of the merger,

5,000,000 shares have been designated series E preferred stock, with a liquidation preference of $24.64 upon consummation of the merger,

3,772,223 shares have been designated series F preferred stock, with a liquidation preference of $24.642 upon consummation of the merger.

Investors list (via PEHub):First round: $6.2 million, came primarily from Venture Frogs, an investment vehicle controlled by Zappos’ CEO Tony Hsieh. Sequoia Capital, Draper Richards and Millennium Technology Ventures are other investors in the company.

Zappos Executives: Anthony Hsieh, Alfred Lin and Fred Mossler will remain employed in their current positions and no one has indicated that they intend to terminate their employment or relationship with the company.

Problems after Acquisition Zappos was in what could have been an ugly situation. It was a 10-year-old company

from which its investors quite legitimately wanted a return. Zappos has $1 billion in gross merchandise sales, boasts a well-known brand, and enjoys an unparalleled rep for excellent customer service.

The trouble is, Zappos CEO Tony Hsieh isn't one of those all-too-common "serial entrepreneurs" who wanted a quick exit and an excuse to try something new. For him, Zappos' first decade was just the beginning.

A share sale to the public wouldn't have given Hsieh the freedom to keep innovating and likely wouldn't have been well-received. Good customer service, including local call centres and free shipping, comes at a cost. Zappos barely breaks even. So that meant an acquisition was one of the only other alternatives.

Good thing it was Amazon that came calling. Amazon is as different from most publicly traded tech companies as Zappos is from most startups. For one thing, Amazon is one of the few that are still run by its founder. And say what you will about Jeff Bezos, he's not known for kow-towing to Wall Street pressures. Bezos and Hsieh alike are willing to disregard short-term gains for the sake of long-term vision

Exhibit 5-Amazon.com Inc, Income Statement, Cash Flow Statement and Balance Sheet, 2007 to 2008, in $ Millions

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…………….Words by Chairman after the Merger“While the Zappos Family is wholly owned by Amazon, we are independently oper-

ated. This means that there is a new board of directors and new owners, but we are still very much doing our own thing.We like to think that Amazon is “high tech”, and Zappos is “high touch”. It has been made very clear to Amazon employees that any attempt to force change in the Zappos Family culture or

what we do will not be tolerated.”

Photographs of zappos

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Bibliography

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Wikipedia Harvard Case paper www.managementparadise.com www.crunchbase.com http://microreviews.org www.forbes.com www.reinventing-business.com

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