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Whither, Zappos?


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Zappos headquarters in downtown Las Vegas.

A column this week in Bloomberg Gadfly – a business and politics commentary site – opines that one of Las Vegas' most visible employers may not be long for this world.

If you read between the lines of a recent shareholder letter, Amazon CEO Jeff Bezos seems to argue Zappos, the online shoe and clothing retailer in downtown Las Vegas, could be on the chopping block.

In the column, by Shelly Banjo, she pointed to a line in Bezos' letter that said: "experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight."

“I think this is the most interesting line his shareholder letter because it kind of creates this road map,” Banjo said.

She said Amazon is famous for being secretive about their plans, but you can look at the company's history to see what it might do. Specifically, Banjo looked to what happened to Amazon bought Quidsi, the parent company of because at the time Amazon's site couldn't deliver the kind of bulk items - like diapers, wipes, and formula - that Quidsi could.

However, when Amazon improved its website and started to offer items that families needed to order in bulk and often, it shut down the website and absorbed it into its site. 

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“It seemed that there were quite a few similarities between what happened at Quidsi and what could happen at Zappos,” Banjo said.

Banjo said part of the issue is Zappos' market share has stayed about the same, but Amazon's shoe and clothing market share has grown.

“That to me was quite interesting that all of this market share was accruing to itself and that maybe they didn’t necessarily need a stand-alone website in Zappos,” she said.

Similarly to Quidsi, Amazon bought Zappos in 2009 at a time when Amazon's website did not offer the same customer buying experience for shoes as Zappos did. However, that has changed. Zappos also brought the idea of delighting customers with free shipping and returns, and excellent customer service.

“The question is at what point does Amazon no longer need Zappos?” Banjo said.

There are some differences between and Zappos. Zappos is a larger company with more distribution and more employees. 

Amazon did not reply to requests to comment on this story.

Banjo said her opinion story is just that - opinion, but if it were to happen, she doesn't believe it would be an overnight decision, but more of a "gradual sunsetting."


Shelly Banjo, Bloomberg Gadfly

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