Thursday, July 23, 2009

Zappos Creates Market Value in Amazon Eyes

Amazon is acquiring Zappos.com for $847 Million. With over a billion in revenue (See Forbes article) and reportedly earning $40MM, Zappos has clearly shown that there is profit is shoes. Not only profit, but equity value as well.

Where does all that value come from? Customer service. Zappos has differentiated itself among all shoe sellers by devoted, passionate, exceptional customer service. they successfully took a near-commodity product category and created brand value by differentiating themselves on service - filling a much needed gap in the online marketplace. (By the way, Amazon values customer service and has been a leader in technology solutions for serice - witness their book recommendations.) The lesson for marketers is to look for unconventional ways to differentiate the entire solution bundle (products and services), and you can create real market value.

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