Amazon’s Acquisition of Zappos
Acquisition regarding Amazon and Zappos
Companies that want to be among the elite competitors in their particular fields have to be able to adapt and evolve in an always changing market place. In order to do so many large companies initiate mergers or acquisitions with smaller or similarly sized companies. They believe they can leverage and collaborate with each other in order to create more company value. The main difference between a merger and an acquisition is a merger is a situation in which two firms agree to unite as one single company rather than remain two separately operating firms owned by one company. The firms are usually the same size, and both companies’ stocks are surrendered creating new company stock issued in its’ place. An acquisition is when one company completely buys out the selling companies stock and makes itself the new owner of the company. Legally the selling company still exists as an independent legal entity, but overall control is in the hands of the parent company.
In July 2009 CEO of Zappos, Tony Hsieht made the announcement of Amazon’s acquiring of Zappos. In a lengthy e-mail Tony eloquently explains the future of Zappos and what will take place in the near future at Zappos. Throughout Amazon’s reign as online shopping powerhouse, they have been consistent in one of the most important aspects--growing and developing as a long-term contender in the online shopping world. Amazon has adapted and involved in the always changing markets by expanding market share through acquisitions. In 1998 Amazon expanded itself into new markets with three key acquisitions. Two of the acquired companies, Bookpages and Telebook, were bought to expand Amazon’s market share into Europe; and the third acquisition, The Internet Movie Database (IMD), was bought to expand Amazon into a new developing market of online video sales.
Amazon has always stressed customer service and customer ease as a main objective throughout their development. Zappos is a company known to be a customer service company since its inception. In fact, Tony Hsieh stated in a Harvard business review article that he does not think of Zappos as a shoe company, but rather a customer service company. On the surface this acquisition seemed like a good fit for both parties, but the reality of high failure rates of acquisitions signifies there are many things to think about when considering acquiring a company. Our team will give a brief analysis on pre-acquisition activity within both companies, analysis of the acquisition itself, and give an overview of the success or failure of the acquisition. The key aspects to consider in this acquisition are as follows: the simplest and most underestimated factor is what are the specific goals of each company in regards to a possible acquisition, can the two separate companies effectively leverage each other’s strengths to create a greater company value, and do these two companies align with one another in order to carry out their objectives and grow long-term. A History Of Zappos
Zappos is an online selling shoe company founded in 1999 by Nick Swinmurn, Alfred Lin, and Tony Hsieh. The company’s key concept is that they are in the customer service business, not a shoe company. Customer service is Zappos’ main asset. They do everything a little bit differently than any other company. Tony Hsieh encourages company culture which is the core of the company allowing them to be so successful. Before the acquisition, Zappos CEO Tony Hsieh had to make sure that the company will remain unchanged. Many people thought it would be end of Zappos and their culture after Amazon bought them. Amazon took over Zappos, but allowed them to run separately, keeping their company name and culture. Zappos’s goal for the future is to deliver happiness to their customers and acquisition by Amazon allowing them to leverage each other’s strengths. Now with the merger Zappos has much better cash...
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