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Amazon Puts a Bow on Zappos Acquisition

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Amazon.com announced today that it has completed its acquisition of online footwear retailer Zappos.com, snugging up the laces on a roughly-$850 million deal it announced back in July. Zappos established itself with over-the-top customer service that made consumer comfortable with purchasing items that are notoriously difficult to get right sight-unseen—shoes—and Amazon is promising that Zappos’ management and operations will remain intact and independent of Amazon. Zappos will continue to operate out of Las Vegas.

The mostly-stock deal has Zappos investors swapping their Zappos stock for Amazon. In a letter announcing the acquisition, Zappos CEO Tony Hsieh noted the Amazon acquisition represented an opportunity to expand the Zappos brand and culture through Amazon’s well-oiled e-commerce and fulfillment system, although Zappos said it plans to maintain its own relationships with partners and vendors, and let Amazon do the same. Zappos also plans to keep the Amazon brand separate from the Amazon brand. Overall, customers shouldn’t see a major change to Zappos operations; behind the scenes, Zappos will have access to some Amazon.com resources, and its possible Amazon may want to leverage some Zappo’s warehouse space.

Amazon’s acquisition of Zappos puts an end to Amazon’s own experiment with the online show marketplace: in 2007 the company launched Endless.com, but the effort generated only a fraction of the consumer interest enjoyed by Zappos. Zappos customer service policies are generally seen as the best in the industry, offering free shipping and free returns: now that the acquisition is complete, Zappos will keep doing what it’s been doing…only the rewards will go to Amazon.

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