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BREAKING NEWS - Amazon Buys Zappos

If the shoe fits...

Amazon acquires Zappos. Or according to Zappos CEO Tony Hsieh, ‘‘Zappos and Amazon sitting in a tree...’’.

In almost 15 years of unprecedented growth, Amazon has never reached into its pockets like it just did. About $847 million into its pockets.

Amazon Buys Zappos

The Seattle based e-commerce titan has pushed its ever increasing financial efforts into apparel sales. This has always been an area where Amazon has been lacking, but today’s purchase of Zappos is perhaps the most obvious admission of its failure to dominate this lucrative sector.

When it comes to a copy of Harper Lee’s ‘To Kill a Mockingbird’ or a rare Tarantino DVD, Amazon has long been the internet’s go to guy, but even with blood, sweat and tears, it hasn’t had the success and conversion rate that Tony Hsieh’s Zappos has demonstrated. In this respect, the deal makes sense. "They've been trying to do it for years with very little success," said Sucharita Mulpuru, a Forrester Research analyst.

With $23 billion in annual sales generated by footwear and apparel online, Amazon appears to have made the move with money in mind. According to Forrester, this sector tops the hyper competitive PC market, ($16 billion) and consumer electronics ($11 billion).

Amazon acquires Zappos

Whilst Amazon has stated that they aren’t ‘disappointed’ with the performance of Endless.com (their presence in this market), this move is clearly an indicator of the company’s desire to become a more prominent player in certain areas of online retailing.

The move has, however, prompted some critics to question Amazon’s motives. Is it purely a case of profit and turnover that has led Amazon to tap into a sector in which they weren’t “King of the Hill”? Or, as some are speculating, is it perhaps a pre-emptive manoeuvre to prevent one of the most celebrated online retailers from expanding their repertoire into segments that Amazon has traditionally dominated?

After all, Amazon themselves started as an online bookshop before rapidly expanding into sector after sector.  As a shopping option Amazon is engrained into our lives as the de facto choice for online purchasing, a podium place they simply cannot afford to share.

Both have shown a resilience and sustainability even in the most challenging of times, which is good reason for such attention from not only Silicon Valley, but the financial and retail titans.