Does Amazon Still Own Zappos in 2024? A Deep Dive

ByCharles Scott Last Update on

Not only does Amazon still own Zappos in 2024, but the 2009 deal continues paying dividends for both companies. As an industry expert, I have closely followed the Amazon-Zappos deal and partnership over the past 14 years. Here I provide detailed analysis on their past, present, and future.

What Was Zappos Before Acquisition?

To evaluate the acquisition‘s impact, it‘s important to establish Zappos‘ starting point in 2009.

Key Facts:

  • Founded in 1999 as an online shoe retailer
  • Expanded into handbags, apparel and more by 2009
  • 2008 Revenue: $1 billion
  • Positive net income each year aside from 2000
  • Customer-obsessed culture and exemplary service
  • Headquarters and warehouse in Shepherdsville, KY

Pre-Acquisition Strengths:

  • Trusted brand in online shoe sales
  • 365-day return policy earned customer loyalty
  • Culture focused on employee happiness
  • Robust supply chain and inventory management

So Zappos operated successfully pre-acquisition, with surging annual revenues over 35%. Yet its customer reach paled in comparison to Amazon‘s, a key rationale for the deal.

Why Did Amazon Buy Zappos?

Amazon‘s Potential Motives:

  • Expand fashion/footwear selection to drive more sales
  • Acquire Zappos‘ supply chain and relationships
  • Integrate Zappos‘ customer service model
  • Increase Amazon‘s site traffic and Prime subscriptions

Industry analysts largely viewed the hefty $1.2 billion price tag for Zappos as a strategic play to control more of online retail. And Amazon‘s clothing sales now produce over 15% of total revenue, confirming those strategic motivations.

How Do Amazon and Zappos Operate Today?

Since 2009, Zappos functions as a subsidiary of Amazon but with semi-independent operations:

  • CEO Kedar Deshpande leads day-to-day operations
  • Amazon owns the supply chain and inventory
  • Zappos runs as a separate website and brand
  • Customer service teams remain mostly separate
  • Both companies share warehouses and distribution

This structure allows Amazon to benefit from controlling Zappos behind the scenes while still ensuring strong branding separation between the sites.

Key Statistics on Current Status:

  • Zappos site traffic: 1.2 million monthly visitors
  • 75% of Zappos sales come from shoes
  • Over 50% of Zappos‘ orders are from repeat customers
  • Amazon Prime members get rewards for Zappos purchases

So the numbers validate keeping Zappos as a distinct brand while linking operations.

Evaluating the Amazon-Zappos Acquisition

Benefits Achieved:

  • Expanded Amazon‘s growth into fashion/footwear: ~15% sales
  • Boosted clothing selection from 1M to 4M+ items
  • Increased Amazon‘s customer reach and order volume
  • Improved warehouses and supply chains for both brands

Conversely, some downsides did materialize:

  • Low ROI so far with $1.2B price representing >100x Zappos‘ operating income
  • Minimal impact on Amazon‘s stock price or company narrative

2023 Outlook:

  • Positive – Zappos sales could top $3B in next 5 years
  • Concerning – integration risks if Amazon encroaches further onto Zappos‘ branding

Conclusion: Strong Strategic Rationale But Continued Caution Needed

Looking at the key reasons, operational changes, and financial data, Amazon‘s acquisition of Zappos made strategic sense while carrying risks. Over a decade later, Zappos performing well commercially mitigates those acquisition concerns somewhat but does not negate them.

Amazon would be wise to continue allowing Zappos to operate independently to maximize the remaining value from the $1.2 billion spent. If Amazon respects Zappos‘ branding and culture, while tightly integrating behind the scenes, this deal could ultimately prove itself as transformative.

Charles Scott is a dynamic professional whose academic and career achievements demonstrate a strong commitment to excellence in the retail and consumer service industry. Graduating with an MBA from New York University in 2013, Charles has built a diverse and impressive career portfolio. He has held significant roles as a manager, advisor, and marketer, showcasing his multifaceted skills and deep understanding of the industry.

Beyond his direct professional engagements, Charles has made a notable mark as the head writer and founder of ExpertBeacon.com. This platform stands as a testament to his dedication to consumer empowerment and education. ExpertBeacon.com is a resource designed to assist consumers in addressing their persistent questions about products, services, and companies. Under Charles's leadership, the site provides in-depth, well-researched, and accurate information, all structured in easy-to-follow guides and articles. His work here not only highlights his expertise in the field but also his commitment to providing valuable, actionable information to the public.

Charles's approach is centered on a keen understanding of consumer needs and market dynamics, making him a respected voice in the industry. His contributions through ExpertBeacon.com and his professional roles reflect a blend of strategic thinking, practical knowledge, and a genuine desire to enhance consumer experiences in the retail and consumer service sectors.

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