Amazon (AMZN) just made a terrific move after the bell today, making its largest purchase ever. It’s acquiring Zappos.com for about $890 million in stock (based on today’s closing price) plus another $40 million in restricted stock and cash. Zappos.com is the leading online shoe retailer that did a billion bucks in revenue last year and continues to grow at an exceptional pace despite a slow economy. Considering the kind of valuations that are placed on the likes of Facebook and other social media sites that have trouble monetizing, $930 million looks like a good deal for Amazon. As for Zappos.com, you have to wonder why they didn’t attempt the IPO route with the market improving. If the margins are thin at Zappos then perhaps this is a better deal for them.. we shall see. It will be interesting to see a breakdown of the financials of Zappos.com in future earnings reports of Amazon.
I’m a big fan of Zappos.com and won’t buy shoes anywhere else. Great customer service. Free shipping both ways and a huge selection. They will continue to operate independently as a wholly owned subsidiary of Amazon with current management in place. If Amazon is smart, they’ll let keep it that way.
Both companies are big on customer service, making the purchase a good fit. Here’s a video that Bezos did for Zappos employees discussing the importance of the customer.