Seems like a lot of money for a small oline shoe retailer, doesn’t it?
And, as Seth Godin points out Amazon already sell shoes, have great technology and have great relationships with fulfilment partners. So why do they need Zappos? According to Seth, it’s all about:
- A corporate culture that’s not the same (and where great people choose to work)
- A tight relationship with customers that give you permission to talk with them
- A business model that’s remarkable and worth talking about
- A story that spreads
He’s right, obviously, although I think he under-emphasises the really big prize for Amazon: customer service. I’d like to explore that a little more.
Zappos built their whole brand identity around exemplary customer service. Their tag line is ‘powered by service’. Take a look at their dedicated service twitter feed to see just how open and honest they are in their customer service dealings: they wash their dirty laundry in public, because, if you’ll forgive the analogy, they know it’ll come out clean. At the last count they had 432 employees on twitter, all empowered to do whatever it takes to ensure the customer is satisfied. And their CEO Tony Hsieh (@Zappos) is their most enthusiastic tweeter: he leads from the front. As a result they have built up a huge reserve of trust – and therefore loyalty – with their customers.
Amazon, on the other hand, seems to have grown a little to large and a little too impersonal – despite their algorithm-driven ‘recommendations for you’, and all of the great social media tools they incorporate into their site. And if you’ve ever had any issues with Amazon service you’ll know you don’t come out of it feeling like a human being went to great lengths to sort out your problem.
So it seems clear to me that what Amazon are buying, for their $927m, is customer service, plain and simple.
There’s a clear lesson there for lots of other businesses, not least the airlines, who seem to get torn apart on the social web. But I’ll save that for another post.