Zappos

Zappos.com
Company type	Subsidiary
Industry	Online retail
Founded	1999; 27 years ago
Founder	Nick Swinmurn
Headquarters	Las Vegas, United States
Area served	United States
Key people	Scott Schaefer (CEO)
Products	Footwear, apparel, handbags, eyewear, accessories, clothing
Number of employees	1500+ (2015)
Parent	Amazon
Website	www.zappos.com

Zappos.com is a United States-based online retailer specializing in footwear and apparel, with its main office located in Las Vegas, Nevada. The enterprise was launched in 1999 by entrepreneur Nick Swinmurn and originally operated under the name ShoeSite.com before adopting the name Zappos—a term inspired by the Spanish word for shoes, zapatos. In July 2009, Amazon acquired Zappos through a $1.2 billion all-stock transaction, incorporating it as a subsidiary while providing employees with $40 million in combined cash and restricted stock.

Founding

The inception of Zappos dates back to 1999 when Nick Swinmurn founded the company, supported early on by Tony Hsieh and Alfred Lin via their venture capital firm Venture Frogs, which invested $2 million. The business debuted online as ShoeSite.com but rebranded to Zappos in July of that year. By 2000, Venture Frogs increased their funding, facilitating Zappos’ transition into dedicated office premises. In 2001, Tony Hsieh joined as co-CEO alongside Swinmurn, contributing strategic leadership that propelled the company’s expansion and enhanced its market presence.

Zappos offers a wide range of products including footwear, handbags, eyewear, accessories, and clothing, catering to diverse consumer needs through its e-commerce platform. With a workforce exceeding 1,500 employees and generating $2 billion in revenue as of 2015, Zappos has secured a robust position within the retail sector under Amazon’s ownership.

Expansion

Between 1999 and 2000, Zappos achieved $1.6 million in gross sales. This figure surged to $8.6 million by 2001. In 2004, the company hit $184 million in gross sales and attracted a $35 million investment from Sequoia Capital. That same year marked the relocation of its headquarters from San Francisco to Henderson, Nevada. Over the subsequent three years, annual revenue doubled to reach $840 million. By 2007, Zappos broadened its inventory to include handbags, eyewear, clothing, watches, and children’s products. Sales exceeded $1 billion in 2008. In 2009, Fortune ranked Zappos No. 23 among its Top 100 Companies to Work For.

During the early 2000s, Zappos transitioned from an initial inventory-free model to directly managing stock to better control customer experience—a strategic decision that introduced greater risk but set the company apart in the marketplace. By 2015, Forbes reported that Zappos had surpassed $2 billion in annual revenue, highlighting its considerable growth and influence.

Subsidiary of Amazon

In 2009, Amazon purchased Zappos for an estimated $940 million through a combination of stock and cash payments; the deal was completed in November for roughly $1.2 billion. Initially, founders Tony Hsieh and Alfred Lin intended to buy out their board to maintain company culture during the financial downturn of 2008. However, after negotiations with Amazon CEO Jeff Bezos, they agreed on terms that allowed Zappos to function independently within Amazon’s corporate framework. Shareholders received about 10 million Amazon shares while employees were awarded $40 million in cash plus restricted stock units.

On June 22, 2012, Zappos announced plans to transfer operations of its Kentucky warehouse to Amazon by September 1 of that year. The facility continued operations under the new name 6pm Outlet.

2012 cybersecurity breach

On January 16, 2012, Zappos revealed a security breach that impacted the personal information of 24 million customers. Although encrypted passwords were believed to remain secure and uncompromised, the event led to a class-action lawsuit accusing the company of insufficient protection of user data. After being initially dismissed, the case was reinstated by the Ninth Circuit Court of Appeals. Zappos subsequently appealed to the Supreme Court, which declined to hear the appeal. In October 2019, a settlement granted affected customers a 10% discount on a single purchase. While Zappos did not admit liability, it consented to cover $1.6 million in legal fees.

Relocation of headquarters

On September 9, 2013, Zappos moved its main offices from Henderson, Nevada to the former Las Vegas City Hall facility located in downtown Las Vegas. CEO Tony Hsieh’s vision was to establish a work environment that seamlessly integrated professional and social interactions, cultivating an innovative community atmosphere. This relocation received commendation from Las Vegas mayor Oscar Goodman, who highlighted its positive impact on local economic growth and employment opportunities.

CEO Tony Hsieh’s departure

Tony Hsieh stepped down as CEO on August 24, 2020, after leading the company for 21 years. He was succeeded by COO Kedar Deshpande. Tragically, Hsieh passed away on November 27, 2020, due to smoke inhalation caused by a residential fire. Following Deshpande’s exit, Scott Schaefer, formerly Zappos’ vice president of finance, was named CEO on April 6, 2022.

Product offerings

By 2010, approximately 80% of Zappos’ revenue derived from shoe sales. Starting in 2007, the company broadened its product range to include apparel, handbags, and accessories, which accounted for roughly 20% of yearly revenue. Company leaders anticipated that clothing and accessories could add $1 billion in sales due to the apparel market’s larger scale compared to footwear.

Zappos provides an extensive selection of shoes, including options suitable for vegans. In 2004, the company introduced a high-end collection known as Zappos Couture.

Engagement through social media

CEO Tony Hsieh encouraged staff participation on social media platforms to personalize the brand image, reflecting core value #6: "Build Open and Honest Relationships With Communication." Zappos maintains an active presence across various channels:

Twitter: The organization supports a dedicated microsite for its 500 employees registered on Twitter. Hsieh himself amassed over 2.75 million followers. Employees primarily use Twitter for informal interaction rather than direct advertising, fostering genuine connections.
YouTube
Facebook
Instagram: Zappos manages six verified accounts aimed at diverse groups such as children, charitable causes ("For Good"), running enthusiasts, corporate culture advocates, and disability rights supporters ("Adaptive"). In response to feedback from disability communities in 2020, Zappos began offering single shoes through its Adaptive Instagram account.
Corporate blogs: Multiple blogs discuss aspects related to Zappos’ organizational culture and business approach.

Corporate initiatives and sponsorships

In 2008, Zappos introduced Zappos Insights—a subscription-based video service designed for Fortune-ranked companies aiming to improve operational efficiency and customer experience. This platform allows participants direct interaction with Zappos employees and includes an optional three-day bootcamp at company headquarters featuring sessions with senior executives. This initiative supports Zappos’ strategy of sharing corporate culture and customer service expertise.

In 2007, Zappos expanded its reach by acquiring 6pm.com from eBags, adding a discounted shoe and accessory marketplace to its portfolio.

Zappos sponsors prominent events such as the Rock 'n' Roll Las Vegas Marathon—which annually draws around 28,000 participants—and the West Coast Conference basketball championships. These sponsorships align with their community involvement goals and efforts to enhance brand recognition through programs like "Kidz Day," which provides local youth with shoes and event apparel.

Recognition

Zappos has repeatedly appeared on Fortune magazine's list of the "100 Best Companies to Work For," improving from 23rd place in 2009 to a high of 6th in 2011, and then ranking 11th in 2012. This acknowledgment underscores the company’s effective leadership, distinctive corporate culture, and significant impact within the industry as essential elements contributing to its business success and employee engagement.

External links

– official site