As most avid shoppers now know, Amazon has acquired Zappos.com in a transaction that exceeds $800 million. This is clearly great for Zappos investors. But how about for Zappos and Amazon customers? Is this a marriage made in retail heaven?
Let's start with what we know:
Amazon and Zappos both began with the customer at the core of their operations.
Amazon built credibility and a following through bringing operational efficiency and reliability to the book buying experience. That earned them the right to continue to add product categories through the years. From the first book they sold in 1995, Amazon earned the right to sell music in 1998 and consumer electronics and toys in 1999. Since then the addition of nearly every category has been met with consumer acceptance.
Zappos built a zealot following by guaranteeing the delivery of shoes along with the delivery of a warm and endearing conversation. And an experience delivered by a group of people simply thrilled to be a part of Zappos. This humane approach breeds intense customer loyalty, with customers referring to Zappos as "Their" Zappos.
Both are led by people who "get it" about customer service and customer experience.
Jeff Bezos made the Amazon brand of customer service the brass ring for internet retailers. He is still the passionate flame there, steering direction, making sure that Amazon stays the course as they enter new product categories and new categories of business.
Tony Hsieh gives permission to the hundreds of people who work at Zappos to be "a little crazy at times." Tony and the folks there give people permission to bring the best version of themselves to work, untethered by rules and regulations. This breeds an energy at Zappos that frees people to come up with the ideas that bonds them to customers as people, not as customers and company. Customers feel they know Tony and the others there. They connect and that bond propels them to buy more.
Zappos is growing rapidly, and will benefit from Amazon's ability to help them scale.
With their rapid growth, Zappos experiences an increasing host of challenges to retain the promises they have made to customers about the mechanics of running a multi-product category business and the corresponding services. Amazon is a master at this type of infrastructure.
Let's now move on to what we do not know:
Will Zappos be able to hold on to its zaniness?
This human, zany connection is core to how Zappos built their following with customers. Jeff Bezos knows, based on media reports, that this is the currency of the Zappos brand; the power of his investment. The energy that comes from this zaniness is what attracts and keeps people working at Zappos who make magical moments of customer connections. The intent exists. The work will be to know that there will be new factors at work that could impede or impact this ability. Sustaining the promise to keep Zappos in its own solar system will be fundamental to sustaining the spirit and zaniness of Zappos. These two companies have different cultures internally. Cross-polinating may sound like a good idea, but both partners need to be very clear about character traits of those they might move from one entity to the next. If they don't, they could end up with two entities that are a whole lot of vanilla.
Will Zappos be able to pick and choose the processes and approaches from within Amazon's operations that suit them the most?
This is a wild card. Today I've exchanged very short emails with Tony Hsieh and others at Zappos but we haven't been able to talk about much of anything beyond "congrats" because as you might have guessed, their email boxes are exploding! The wild card is how much Zappos will need to take the "off the shelf" solutions from Amazon, or how much they can tweak the operations to fit the culture and way they interact with customers. For example, Zappos surprises some customers with overnight shipping. Sustaining these touches will be key to sustaining the love customers have for them. People will be on the look-out for having those touches dropped.
Can Zappos retain the ability to make "do the right thing" decisions?
Another wild card. As a private company, Zappos makes a variety of decisions that they must justify to their board, but they do not have the scrutiny of being part of a public company. For me, this goes back to Mr. Bezos and his intent behind the acquisition. There will be some new "rules of the road" and constraints that must be followed. The transparency that Tony and the Zappos gang has fostered however, can be retained. They may have to crusade for it, but my sense is that they will. Time of course is the biggest wild card in terms of sustaining Zappos' unique culture for the long term.
What will happen to Zappos if some of the key players leave the building?
Probably the greatest wild card. Both of these companies have entrenched cultures. But both also have strong leaders at the helm. In my experience with Zappos, I know that there are many keepers of the cultural flame. And that people throughout the company are passionate followers. I am confident that short-term, (within five years), even if some key players left, the culture could sustain Zappos' cultural individuality. The risk is if multiple leaders departed without replacing their ranks with others who steer decisions as they do. Sustaining the culture means building a strong bench beneath the iconic leaders at both of these companies.
Netting this out, here are two of the most customer-focused companies who have found a reason to come together. From what I know about Zappos, this decision was first about sustaining and growing an experience they promised they would deliver to their customers. Amazon has an engine and a competency to help them do that. What I know about Amazon tells me that they see in Zappos a kindred spirit. Are there concerns? You bet? Will we as customers want to make sure that the Zappos we love stays the same? Absolutely. Time will tell. But if I were a betting person, I'd roll the dice with this duo. In his email to employees Tony said that he preferred to characterize this union as "Zappos and Amazon sitting in a Tree" rather than the more conventional description that Amazon acquired Zappos. Let's hope they stay in that tree for a long time. And that five years down the line, these love birds still are singing the same tune.