Case ID: 610015     Solution ID: 36169

Zappos com 2009 Clothing Customer Service and Company Culture Case Solution


It was around July, 2009, when an online private retailer of shoes and clothing, learned that the $19 billion multinational online retailer, finally earned the Director’s approval regarding the merger of the two. Since 2005, Amazon had been eying Zappos for a merger, because this would give them the platform to reinforce its market share in the soft-line retail categories. It took year for Zappos’ directors to realize that the decision was for their own good too. Amazon made a tremendous offer, proposing a 10 million shares of stock (valuing $807 million), a $40 million in Cash and a restricted stock units for their employees. Interestingly Amazon promised for Zappos to independently function as a separate subsidiary. Morgan Stanley, Zappos financial advisor estimated the equity value of the IPO to soar as high as between $650 million to $905 million. This would not only skew Amazon’s offer in financial terms but will also strengthen the market value of Zappos too. Hsieh and Linn Zappos’ CEO and COO, firmly believed that it was indeed the strong culture of the company and their intense focus on customer service that has contributed to its historical success. Only a few days were left before they had to finally given in the final decision on the 21st of July.

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