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  • January 2013
  • Case
  • HBS Case Collection

Zappos.com 2009: Clothing, Customer Service, and Company Culture (MM)

By: Frances X. Frei and Robin J. Ely
  • Format:Multimedia
  • | Language:English
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Abstract

On July 17, 2009, Zappos.com, a privately-held online retailer of shoes, clothing, and other soft-line retail categories, learned that Amazon.com, a $19 billion multinational online retailer, had won its Board of Directors' approval to offer to merge the two companies. Amazon had been courting Zappos since 2005, hoping a merger would enable Amazon to expand and strengthen its market share in soft-line retail categories. While Amazon's interest intrigued Zappos' senior executives, they had not felt the time was right—until now. Amazon's offer—10 million shares of stock (valued at $807 million), $40 million in cash, restricted stock units for Zappos' employees, and a promise that Zappos could operate as an independent subsidiary—was on the table. Zappos' financial advisor, Morgan Stanley, estimated the future equity value of an IPO to be between $650 million and $905 million; this estimate skewed the Amazon offer—at least in financial terms—toward the high end of Zappos' estimated market value. Hsieh and Lin, Zappos' CEO and COO, respectively, knew that much of Zappos' growth, and hence its value, had been due to the company's strong culture and obsessive emphasis on customer service. In 2009, they were focusing on the three C's—clothing, customer service, and company culture—the keys to the company's continued growth. Hsieh and Lin had only a few days to consider whether to recommend the merger to Zappos' board at their July 21 meeting.

Keywords

Customer Relationship Management; Online Technology; Mergers And Acquisitions; Organizational Culture; Growth And Development Strategy; Apparel And Accessories Industry; Retail Industry

Citation

Frei, Frances X., and Robin J. Ely. "Zappos.com 2009: Clothing, Customer Service, and Company Culture (MM)." Harvard Business School Multimedia/Video Case 612-701, January 2013.
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About The Authors

Frances X. Frei

Technology and Operations Management
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Robin J. Ely

Organizational Behavior
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Related Work

    • August 2013
    • Faculty Research

    Zappos.com 2009: Clothing, Customer Service and Company Culture

    By: Frances X. Frei and Annelena Lobb
Related Work
  • Zappos.com 2009: Clothing, Customer Service and Company Culture By: Frances X. Frei and Annelena Lobb
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