Zappos
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Type of site
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Subsidiary of Amazon.com |
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| Founded | July 12, 1999 |
| Headquarters | Las Vegas, Nevada, U.S. Warehouse: Shepherdsville, Kentucky, U.S. |
| Owner | Amazon.com |
| Key people |
Tony Hsieh (CEO), Nick Swinmurn,founder Fred Mossler |
| Industry | Retail |
| Products | Shoes, handbags, eyewear, accessories, clothing |
| Revenue | US$1 billion (2009) |
| Employees | 1,500+ |
| Slogan(s) | We are a service company that happens to sell shoes. And handbags. And more... |
| Website | zappos.com |
Zappos.com is an online shoe and clothing shop based in Las Vegas, Nevada.
In July 2009, the company announced that Amazon.com would acquire it in an all-stock deal worth about $1.2 billion.
Zappos was founded in 1999 by Nick Swinmurn, who says that his initial inspiration came when he failed to find a pair of brown Airwalks at his local mall. That same year, Swinmurn approached Tony Hsieh and Alfred Lin with the idea of selling shoes online. Hsieh was initially skeptical, and almost deleted Swinmurn's voice mail. After Swinmurn mentioned that "footwear in the US is a 40 billion dollar market and 5% of that is already being sold by paper mail order catalogs," Hsieh and Lin decided to invest $2 million through their investment firm Venture Frogs. The company was officially launched in June 1999, under the domain name "ShoeSite.com."
A few months after its launch, the company's name was changed from ShoeSite to Zappos (a variation of "zapatos," the Spanish word for "shoes") so as not to limit itself to selling only footwear. In January 2000, Venture Frogs invested additional capital, and allowed Zappos to move into their office space. During this time, Hsieh found that he "had the most fun with Zappos" and came on board as co-CEO with Nick Swinmurn. After minimal gross sales in 1999, Zappos brought in $1.6 million in revenue in 2000.
In 2001, Zappos more than quadrupled their yearly sales, bringing in $8.6 million. In 2004, Zappos did $184 million in gross sales, and received their first round of venture capital, a $35 million investment from Sequoia Capital. That same year, they moved their headquarters from San Francisco to Henderson, Nevada. Over the next three years, Zappos doubled their annual revenues, hitting $840 million in gross sales by 2007 and expanded to include handbags, eyewear, clothing, watches, and kids’ merchandise.
In 2008, Zappos hit $1 billion in annual sales, two years earlier than expected (one year later, they fulfilled their other long-term goal, debuting at No. 23 on Fortune’s Top 100 Companies to Work For).
In 2009, Zappos started exploring an acquisition by Amazon. 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. 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 Zappos 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. On July 22, 2009, Amazon announced that it would buy Zappos for $940 million in a stock and cash deal. 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 units. The deal was eventually closed in November 2009 for a reported $1.2 billion.
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