[Zappos CEO Tony Hsieh. Photo by laughingsquid.com. ]
Amazon.com, world's largest retailer, announced yesterday that it will acquire Zappos.com, the Internet's largest merchant of shoes and accessories. At the time of the announcement, that stock was valued at $807 million. The market apparently liked the the announcement. By closing time, the value of the stock was up to about $900 million.
When I interviewed Zappos CEO Tony Hsieh for my Twitterville chapter on retailing, he told me how the company formed because the founder could not find the shoes he wanted while shopping in a San Francisco mall; how the company went from making "nearly nothing" in 1998 to passing $1 billion in gross merchandise sales in 2008.
That's a good story, and in that light Amazon.com and Zappos are fellow travelers.
In 1995, Amazon's first full year, it was discounted by a large brick and mortar bookstore executive who said his company lost more money to shoplifters than it did to Amazon. Now, Amazon is the world's largest retailer and is on track to gross $20 billion in sales in the current fiscal year.
But then there are certain places where the two companies are very different. The one that makes me cold to the deal is culture.
Tony Hsieh told me that an essential component to the Zappos strategy was to build a customer-service focused culture that just happens to sell shoes and accessories. He moved Zappos from San Francisco to Las Vegas to build a less technical and more service-oriented culture.
It's the focus on culture that brought Zappos into social media and particularly Twitter, where it has become the wrld's tweetingest retailer and perhaps the most loyal base of online customers. When I asked on Twitter if anyone had a negative customer experience with Zappos, I was told to "stop picking on those guys. They do a great job all the time."
Amazon too, has loyal customers. I'm one of them. But it is not a particularly Conversational Corporation like Zappos. It provides superior service, but it's culture seems to focus on efficiency, not customer service. You just don't see many Amazon employees chatting online about their favorite sports teams or recent rock concert experiences.
You can argue, and rightfully so, that these are tough times for retailers and efficiency is what is needed more that transparent conversations. You can argue that Amazon has created the world's best-oiled retail machine and I cannot argue with you.
But something there is that loves the friendliness, even the occasional gabbiness of the Zappos guys. Something there is that loves the accessibility of Tony Hsieh who tweets abundantly himself, while it probably never occurred to Amazon founder Jeff Bezos to tweet r blog or do a YouTube clip on what Amazon looks like inside.
One of the most difficult aspects of mergers is the consolidation of cultures. Companies, quite simply do things differently. Acquiring companies look for ways to make things more efficient and I will be pleasantly surprised if Zappos is allowed to keep the culture and style and focus on service that made it a billion dollar entity after 10 years of independence.
