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Zappos

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Zappos.com
Company typeSubsidiary
IndustryRetail
FoundedJuly 12, 1999; 25 years ago (1999-07-12)
FounderNick Swinmurn
Headquarters
Las Vegas, Nevada
,
U.S.
Key people
Scott Schaefer (CEO)
Kedar Deshpande (Ex CEO)
Tony Hsieh (Ex CEO)
Alfred Lin (Ex Chairman, COO)
Fred Mossler
Steve Hill (Ex VP of Merchandising)
Arun Rajan (Ex COO & ex CTO)
ProductsShoes, handbags, eyewear, accessories, clothing
RevenueUS$2 billion (2015)
Number of employees
1,500+
ParentAmazon
Websitezappos.com

Zappos.com is an American online shoe and clothing retailer based in Las Vegas, Nevada, United States.[1] The company was founded in 1999 by Nick Swinmurn and launched under the domain name Shoesite.com. In July 2009, Amazon acquired Zappos in an all-stock deal worth around $1.2 billion at the time.[2][3][4][5] Amazon purchased all of the outstanding shares and warrants from Zappos for 10 million shares of Amazon's common stock and provided $40 million in cash and restricted stock for Zappos employees.[6]

Company history

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Inception

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Zappos former CEO Tony Hsieh

Zappos was founded in 1999 by Nick Swinmurn.[5] Swinmurn launched the company with Tony Hsieh and Alfred Lin,[7] who invested $2 million through their investment firm Venture Frogs.[8] The company was officially launched online in 1999 as ShoeSite.com.[9]

In July 1999, the company's name was changed from ShoeSite to Zappos after "zapatos", the Spanish word meaning "shoes".[9] In 2000, Venture Frogs invested in the business and Zappos moved into their office space.[10] In 2001, Hsieh came on board as co-CEO with Nick Swinmurn.[10]

Growth

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Zappos.com former headquarters in Henderson

From 1999 to 2000, Zappos earned $1.6 million in gross sales.[9] In 2001, Zappos brought in $8.6 million, a significant increase from the previous year.[9] In 2004, Zappos reached $184 million in gross sales and received a $35 million investment from Sequoia Capital.[9][11] That same year, they moved their headquarters from San Francisco to Henderson, Nevada.[8] Over the next three years, Zappos doubled their annual revenues, hitting $840 million in gross sales. By 2007, the company expanded to include handbags, eyewear, clothing, watches, and kids’ merchandise.[12][13] In 2008, Zappos hit $1 billion in annual sales. One year later, they debuted at No. 23 on Fortune's Top 100 Companies to Work For.[14][15] In the early 2000s, Zappos made the decision to move away from its original business model wherein the company does not manage any inventory. Hsieh noted, "Even though it was hard to walk away from sales at a time when nobody is offering you money, we couldn't distinguish ourselves in the eyes of our customers if we weren't going to control the entire experience. We had to give up the easy money, manage the inventory, and take the risk."[16] In 2015 Forbes reported Zappos produces "in excess of $2 billion in revenues annually".[17]

Amazon subsidiary

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In 2009, Zappos announced an acquisition by Amazon.[18] 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.[8] 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 the company outright. After an hour-long meeting with Amazon CEO Jeff Bezos, Hsieh sensed that Amazon would be open to letting Zappos continue to operate as an independent entity, and started negotiations.[8] On July 22, 2009, Amazon announced that it would buy Zappos for $940 million in a stock and cash deal.[19][20][21] 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.[21] The deal was eventually closed in November 2009 for a reported $1.2 billion.[19]

On June 22, 2012, Zappos announced it would be handing operations of its Kentucky warehouse to Amazon on September 1, 2012.[22] The outlet housed in the Kentucky warehouse remains open, but the name was changed to 6pm Outlet.[23]

2012 hacking incident

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On January 16, 2012, Zappos announced that its computer systems were 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, though it noted that it was highly unlikely that password information was obtained due to encryption.[24] This incident led to a class action suit In re Zappos.com, Inc., Customer Data Security Breach Litigation, with plaintiffs claiming that Zappos did not adequately protect their personal information.[25] After the case was initially dismissed, plaintiffs appeal was upheld by the Ninth Circuit Court of Appeals.[26] Zappos appealed the decision to the Supreme Court, but this was ultimately rejected.[27] A settlement was reached in October 2019. Customers received a 10% discount on one order. Zappos denied wrongdoing, but is expected to pay $1.6 million in court costs.[28]

New headquarters

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Old Las Vegas City Hall prior to renovation and becoming new headquarters

On September 9, 2013, Zappos moved their headquarters from Henderson, Nevada, to the former Las Vegas City Hall building in downtown Las Vegas.[29][30][31][32] CEO Tony Hsieh, at the time stated that he wanted "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."[33] The move was lauded by Las Vegas mayor Oscar Goodman who said "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."[33][34]

Tony Hsieh steps down as CEO

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On August 24, 2020, Tony Hsieh retired as CEO after 21 years at the helm. COO Kedar Deshpande took over as the new CEO.[35] On November 27, 2020, Tony Hsieh died from smoke inhalation suffered in a house fire.[36] After Deshpande left Zappos, Scott Schaefer, the company's VP of finance, was named Zappos CEO on April 6, 2022.[37]

Products

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The Zappos fulfillment center in Kentucky

As of 2010, shoes accounted for about 80% of Zappos' business.[38] As of 2007, Zappos had expanded their inventory to include clothing, handbags and other accessories, which accounted for 20% of annual revenues. Zappos executives stated that they expected that clothing and accessories would bring in an additional $1 billion worth of revenue, as the clothing market is four times the size of the footwear market.[38][39][40]

The company sells many different types of footwear, including vegan shoes.[41] In 2004, they launched a second line of shoes called Zappos Couture.[42]

Social media

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CEO Tony Hsieh encouraged his employees to use social media networks to put a human face on the company and engage with customers, following their core value #6: "Build Open and Honest Relationships With Communication".[43] Zappos employees maintain an active presence on:

  • Twitter: Zappos runs its own Twitter microsite for its 500 employees registered on Twitter. Among them, Tony Hsieh was one of the most followed persons on Twitter with 2.75[44] million followers.[45] Employees are encouraged to use their Twitter accounts for casual communication rather than promotions or marketing pitches, in an effort to humanize the company, like when Hsieh tweeted before going onstage at a tech conference: "Spilled Coke on left leg of jeans, so poured some water on right leg so looks like the denim fade."[46]
  • YouTube
  • Facebook
  • Instagram: Zappos has six verified Instagram accounts: one main account, one for kids, one charity account ("For Good"), one account for running, one about the company culture and one that is "Adaptive", about disability rights. In 2020, they announced on the Adaptive account that they would be selling single shoes after public pressure from disability activist groups.[47]
  • Corporate blogs: Zappos runs several blogs[48] covering topics related to its business.

Corporate programs and sponsorships

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In 2008, Zappos launched Zappos Insights, a video subscription service aimed at Fortune 1 million companies that are looking to improve their company operations and customer service. The service allows participants to ask questions to and receive answers from Zappos employees.[49]

Zappos Insights also offers a three-day bootcamp where participants visit the headquarters and have meetings with Zappos executives.[50][51]

In 2007, Zappos acquired 6pm.com from eBags. The site sells shoes and accessories.[52][53]

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 shoes and an event T-shirt.

Recognition

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Zappos was ranked 23rd on the Fortune magazine's list of "100 Best Companies to Work For" in 2009, 15th in 2010, sixth in 2011, dropping slightly to 11th in 2012.[15][54][55][56]

See also

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References

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  1. ^ Max Chafkin (2006). "How I Did It: Tony Hsieh, CEO, Zappos.com". Inc.com. Retrieved October 11, 2007.
  2. ^ "Amazon.com, Inc, Form 8-K, Current Report, Filing Date Jul 22, 2009" (PDF). secdatabase.com. Retrieved April 25, 2018.
  3. ^ Wauters, Robin (November 2, 2009). "Amazon Closes Zappos Deal, Ends Up Paying $1.2 Billion". TechCrunch. Retrieved January 28, 2010.
  4. ^ Hsieh, Tony (June 1, 2010). "Why I Sold Zappos". Inc. Retrieved June 8, 2010.
  5. ^ a b Jacobs, Alexandra. Happy Feet: Inside the online shoe utopia The New Yorker. September 14, 2009.
  6. ^ Parr, Ben (July 22, 2009). "Here's Why Amazon Bought Zappos". Mashable. Retrieved June 2, 2020.
  7. ^ I Am CNBC Tony Hsieh Transcript Archived June 12, 2011, at the Wayback Machine CNBC. August 15, 2007.
  8. ^ a b c d Hsieh, Tony. How I Did It: Tony Hsieh, CEO, Zappos.com Inc. Magazine. September 1, 2006.
  9. ^ a b c d e Staff, F. N. (May 4, 2009). "Zappos Milestone: Timeline". Footwear News. Retrieved December 13, 2018.
  10. ^ a b Zappos Milestone: Q&A with Nick Swinmurn. Footwear News. May 4, 2009.
  11. ^ Marshall, Matt. Sequoia’s bet on Zappos Archived March 13, 2011, at the Wayback Machine. Silicon Beat. October 29, 2004.
  12. ^ Chessman, Kristin. Young Millionaires Who Made It Bigger. Entrepreneur. October 5, 2007.
  13. ^ McDonald, Duff. Case Study: Open Source at Zappos. Baseline Magazine. November 10, 2006.
  14. ^ Mitchell, Dan. Shoe Seller's Secret of Success. The New York Times. May 24, 2008.
  15. ^ a b 100 Best Companies to Work For. Fortune. 2009.
  16. ^ "Tony Hsieh: Redefining Zappos' Business Model". BusinessWeek. Archived from the original on May 31, 2010. Retrieved May 23, 2015.
  17. ^ Pontefract, Dan. "What Is Happening At Zappos?". Forbes. Retrieved July 29, 2019.
  18. ^ Staff, W. S. J. (July 22, 2009). "Zappos CEO's Letter to Staff". WSJ. Retrieved December 13, 2018.
  19. ^ a b Lacy, Sarah. Amazon Buys Zappos; The Price is $928m., not $847m. TechCrunch. July 22, 2009.
  20. ^ McCarthy, Carolone. Amazon to snap up Zappos. CNet News. July 22, 2009.
  21. ^ a b Letzing, John (July 22, 2009). "Amazon buys retailer Zappos in $807 million deal". MarketWatch. Retrieved July 24, 2009.
  22. ^ "Zappos sheds its Kentucky warehouses". Las Vegas Review-Journal. June 7, 2012. Retrieved July 12, 2018.
  23. ^ "Zappos shoe warehouse makes it possible to return from Louisville well-heeled". Pittsburgh Post-Gazette. Retrieved July 2, 2018.
  24. ^ Goldman, David. "Zappos hacked, 24 million accounts accessed". CNNMoney. Retrieved July 12, 2018.
  25. ^ Bell, Jennie (March 9, 2018). "Court Reopens 2012 Zappos Data Breach Litigation". Footwear News. Retrieved July 12, 2018.
  26. ^ Phelps, Manatt; Lawson, Phillips LLP-Richard P. (March 29, 2018). "Zappos Must Face Data Breach Lawsuit, Ninth Circuit Rules | Lexology". www.lexology.com. Retrieved July 29, 2019.
  27. ^ Locker, Melissa (March 25, 2019). "Supreme Court rejects Amazon's Zappos on data breach lawsuit". Fast Company. Retrieved July 29, 2019.
  28. ^ Nickelsburg, Monica. "Zappos settles major data breach lawsuit with 10% discounts for customers through end of year". GeekWire. Retrieved July 23, 2024.
  29. ^ Joe, Schoenmann (September 9, 2013). "Joe Downtown: Historic day for city's center as Zappos makes itself at home". Las Vegas Sun. Retrieved December 4, 2013.
  30. ^ Kozar, Matt. "New details emerging about Zappos's planned move to Las Vegas City Hall". KSNV NBC Las Vegas. Archived from the original on July 14, 2011. Retrieved December 2, 2010.
  31. ^ Schoenmann, Joe. How Zappos’ move to downtown Las Vegas was sealed Las Vegas Sun. Dec. 6, 2010.
  32. ^ Landau, Blake. 4 Questions With Tony: What Other Businesses Can Learn from Zappos CMS Wire. December 13, 2010.
  33. ^ a b Medina, Jennifer. Las Vegas Gets New City Hall, and a Mullet. The New York Times. December 26, 2010.
  34. ^ Schoenmann, Joe. Zappos views Las Vegas City Hall as perfect fit for new headquarters. Las Vegas Sun. Nov. 29, 2010.
  35. ^ Abel, Katie (August 24, 2020). "Exclusive: Visionary Zappos CEO Tony Hsieh Is Stepping Down After 21 Years". Footwear News. Retrieved August 26, 2020.
  36. ^ "House-fire death of former Zappos CEO Tony Hsieh ruled accidental". UPI. Retrieved December 1, 2020.
  37. ^ Zappos.com. "ZAPPOS.COM NAMES SCOTT SCHAEFER AS CHIEF EXECUTIVE OFFICER". www.prnewswire.com. Retrieved July 19, 2022.
  38. ^ a b Cheng, Andria Zappos, under Amazon, keeps its independent streak. Market Watch. June 11, 2010.
  39. ^ Evans, Kate. Zappos posted strong profits in 2008. Digital Commerce 360, July 28, 2009
  40. ^ Mui, Ylan. Online Sales Shift: Apparel Outpaced Computers in '06. Washington Post. May 14, 2006.
  41. ^ Fox, Katrina. "Watch Out Jimmy Choo, Luxury Shoes Are Going Vegan". Forbes. Retrieved July 13, 2018.
  42. ^ Slatalla, Michelle. Style by Way of Grandmother’s Closet. The New York Times. October 7, 2004.
  43. ^ Palmer, Kimberly. Want the Best Deals? Check Twitter or Facebook. U.S. News & World Report. July 15, 2009.
  44. ^ "Zappos (@zappos)". Twitter. Retrieved May 23, 2015.
  45. ^ "Who has the most Followers on Twitter? (Top 200)". Twitaholic. Retrieved May 23, 2015.
  46. ^ Chafkin, Max. The Zappos Way of Managing. Inc. Magazine. May 1, 2009.
  47. ^ "What We Live By". www.zappos.com.
  48. ^ Christoffersen, Trish. "Zappos Stories". Zappos.com. Retrieved May 23, 2015.
  49. ^ "Zappos Launches Insights Service | Adweek". December 28, 2014. Archived from the original on December 28, 2014. Retrieved April 23, 2019.
  50. ^ "smSmallBiz.com | Zappos.com Dips Toe Into Management Consulting". May 7, 2010. Archived from the original on May 7, 2010. Retrieved April 23, 2019.
  51. ^ Cheng, Andria. "Zappos's grand mission doesn't involve selling shoes". MarketWatch. Retrieved April 23, 2019.
  52. ^ Zappos Steps Up to Acquire 6pm.com. Digital Commerce 360. July 10, 2007.
  53. ^ Dilworth, Dianna. Zappos.com acquires 6pm.com for increased shoe retailing presence. Direct Marketing News. July 10, 2007.
  54. ^ 100 Best Companies to Work For. Fortune. 2011.
  55. ^ 100 Best Companies to Work For. Fortune. 2011.
  56. ^ 100 Best Companies to Work For. Fortune. 2012.
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