E-tailer Zappos has been a household name in the US for some time. The shoe specialist has been on a phenomenal growth path, with sales skyrocketing from $1.6m (£969,820) in 2001 to more than $1bn (£606.1m) last year.
Zappos became known on an international scale last week after it was swallowed up by internet giant Amazon in an $847m (£513.4m) stock and cash deal.
The scale of Zappos – which stocks more than 3 million items – makes it a dominant force in the US and with Amazon as its parent, it could now take on international markets.
The shoe e-tailer was founded by Nick Swinmurn in 1999 after an unsuccessful shopping trip to buy shoes. He brought in Tony Hsieh, one of the company’s original investors, as chief executive in 2000. Hsieh had extensive experience of internet businesses, having co-founded web service company LinkExchange, which he sold to Microsoft for 65m (£160.6m) in 1998.
The e-tailer’s winning formula is its customer service. It offers free delivery and returns, and also has a 24-hour complaints service. This service has helped it grow mostly by word of mouth, and minimal advertising.
Zappos is keen to protect this reputation for customer service. After it puts employees through an expensive one-month training programme it then offers them Story text,000 (£606) to leave, with a view that if they stay, they are committed to the brand.
The e-tailer is also a pioneer in social media, with its own channel on YouTube and more than 400 of its staff on Twitter.
Finlay Clark, senior strategist at online consultancy Big Mouth Media, said Zappos needs to retain this culture if it goes international, but believes the tie-up with Amazon will be a good move for both parties.
He says: “Amazon is not driving forward the market the way Zappos is. Amazon has technology and fulfilment capabilities that will be good for Zappos.”
However, Hsieh wrote in a letter to employees after the deal was announced saying: “We are planning on continuing to run Zappos as a separate company with our own culture and core values.”
Clark adds that the deal could pave the way for Amazon to flesh out the areas where it isn’t dominant. He says: “In some areas it doesn’t need help but in fashion and footwear it isn’t leading.” With shoes ticked off, Amazon could now be seeking other acquisitions in areas such as fashion or grocery.