In his blog, marketing guru Seth Godin asks the question, what is Amazon really buying when it spends a reported $847 million ($807 in stock and $40 million cash) to buy Zappos?
And then he answers it.
Amazon has plenty of shoes, plenty of technology and a world-class distribution capability, he writes. What it’s acquiring is:
- A corporate culture that’s not the same (and where great people choose to work)
- A tight relationship with customers that give you permission to talk with them
- A business model that’s remarkable and worth talking about
- A story that spreads
- Leadership
I’d say he missed a key point: the brand. Zappos is the No. 1 brand among online shoe retailers.
Amazon has a great brand too, but not for shoes.
Amazon sells everything: shoes, music, software, consumer electronics, toys… But its brand — despite its strategy — is not that of an online department store. Amazon is a bookstore that has diversified. Its brand is all about books. That’s part of the reason the Kindle Reader has taken off so well; it’s not just a nice technology that people were ready to use; it’s a natural outgrowth of Amazon’s brand.
If Amazon introduced some innovation in shoes that was just as notable as the Kindle, I doubt it would have the same impact. But Zappos would have a chance. You expect Zappos to do stuff related to shoes; you expect Amazon to do stuff related to books.
Maybe the folks at Amazon realize that the many people who buy shoes online would rather buy them from Zappos than from a great online book store that happens to sell shoes. Perhaps they realize the most efficient way to become the leading online vendor of shoes is not to be like Zappos, but rather to be Zappos.
How Zappos became such a powerful brand is another issue. It took a lot of hard work, good planning, flawless execution and cash. But in recessionary times like these, when so many businesses don’t have the patience for branding and would rather spend their marketing resources solely on generating leads and sales, there’s a lesson in the power of a good brand. An $847 million lesson.