Zappos (company)
Zappos is an online retailer based in Las Vegas, Nevada, specializing in shoes and apparel for men, women, and children, as well as accessories. Founded in 1999 by Nick Swinmurn, the company initially struggled to find investors due to skepticism about online shoe sales. However, with the investment from Tony Hsieh, who later became its sole CEO, Zappos quickly gained traction, achieving over $1 billion in gross sales by 2008. In 2009, it was acquired by Amazon for approximately $1.2 billion, allowing Zappos to maintain its unique management culture and operational independence.
Renowned for exceptional customer service, Zappos offers a 365-day return policy and free shipping, with a dedicated customer loyalty team that handles thousands of inquiries daily. The company fosters a distinctive work culture, encouraging employee engagement through quirky activities and a set of ten core values. In a bold move, Zappos adopted a holacratic organizational structure in 2013, eliminating job titles and promoting a self-governing work environment. With annual revenues of around $2 billion, Zappos continues to be recognized as a leader in customer satisfaction and innovative workplace culture.
On this Page
Subject Terms
Zappos (company)
Company Information
- Date Founded: 1999
- Industry: Retail, e-commerce
- Corporate Headquarters: Las Vegas, Nevada
- Type: Private
Zappos is an online shoe and clothes retailer headquartered in Las Vegas, Nevada. The diversified company sells footwear for women, men, and children as well as apparel, handbags, watches, and other accessories on its website, Zappos.com. The retailer had 1,677 employees as of 2024.
The company was founded by San Francisco entrepreneur Nick Swinmurn in 1999. Swinmurn came up with the idea for Zappos when he couldn't find a pair of shoes he wanted at a nearby mall. After unsuccessfully searching the Internet, Swinmurn saw the need for an online store that specialized in selling shoes, and he created his own website.
Investor Tony Hsieh joined the start-up business in 2000. Swinmurn and Hsieh served as co-chief executive officers (CEOs) until Swinmurn left the company in 2006. Since then, Hsieh became the face of Zappos.
Zappos rose to become a respected and successful online retailer in less than a decade. In 2000, Zappos did $1.6 million in gross sales. In 2008, the company's gross sales surpassed $1 billion. By 2015, the company's revenues were over $2 billion. The privately held company was purchased by Amazon in 2009, becoming a subsidiary of the retail giant.
After 21 years as CEO, Hsieh retired and COO Kedar Deshpande took over. Just three months after retirement, Hsieh died from smoke inhalation after fire broke out in his home. In 2021, Deshpande stepped down as CEO and left the company. The company named Scott Schaefer as CEO in April 2022, and then Kim Fleissner in 2024.
With its motto to "Deliver wow," Zappos is widely known for its personalized customer service and unique work culture. Through the Zappos Insights program, the company shares its core values and culture with other businesses. The company has shaken up its structure and policies in its quest to provide quality service.
History
Zappos was originally called ShoeSite.com. Later in 1999, Swinmurn changed the website's name to Zappos, inspired by zapato, the Spanish word for shoe.
Swinmurn had trouble finding investors for the business. Most were doubtful that customers would buy shoes online without being able to try them on first. But Swinmurn found an encouraging statistic: 5 percent of shoe sales in the United States in 1998 were conducted through mail-order catalogs.
The statistic caught Hsieh's attention. In 1998, Hsieh sold his Internet advertising company, LinkExchange, to Microsoft for $265 million. The next year, Hsieh developed his own investment firm, Venture Frogs. The business executive was willing to take a chance on Zappos and invested $500,000 in the company. By 2001, Hsieh was running Zappos with Swinmurn.
The company first approached shoe stores about selling their merchandise online, then transitioned to signing footwear brands directly. In 2002, the company leased a warehouse in Shepherdsville, Kentucky.
Company officials wanted to expand Zappos' selection and attract customers to the website, but it took time to build relationships with footwear brands. In Zappos' early years, Hsieh put about $15 million into the company to keep it afloat.
By 2003, the retailer was breaking even. Zappos accumulated $70 million in gross sales in 2003 and $184 million in 2004. Its sales doubled to $370 million in 2005.
The start-up—initially based in San Francisco, California—was growing fast. After receiving an injection of cash from venture capital firm Sequoia Capital, Zappos moved its headquarters and customer service center to Henderson, Nevada, in 2004. Two years later, Swinmurn left Zappos to focus on developing more start-ups. Meanwhile, the company expanded its state-of-the-art warehouse in Shepherdsville, Kentucky.
As the lone CEO, Hsieh looked to diversify the company's offerings. In 2007, Zappos expanded into clothing and accessories, such as purses, sunglasses, jewelry, and watches. That year, the company's gross sales climbed to $840 million.
In 2008, Zappos achieved an important milestone: the company exceeded $1 billion in gross sales. The thriving business caught the eye of executives at Amazon.com. In 2009, Amazon acquired Zappos for $1.2 billion in a deal that stunned the retail industry. The deal allowed Zappos to keep its management structure, employees, and office culture in place. Amazon also permitted Zappos to run independently of its parent company.
Zappos continued to experience such growth that the company restructured into ten separate companies under the Zappos Family banner in 2010. In 2013, Zappos moved into its new headquarters in downtown Las Vegas, Nevada.
The retailer carries hundreds of top brands, including footwear from Nike, Birkenstock, and UGG and apparel and accessories from Dolce & Gabbana, Coach, and Kate Spade New York. Zappos brings in revenues of $2 billion a year.
Impact
Zappos is famous for its customer service. The company is dedicated to putting its customers first and personalizing the online shoe shopping experience. Zappos established respect and reliability in the online marketplace by offering a 365-day return policy and free shipping.
The retailer's customer loyalty team was once made up of six hundred employees, who respond to as many as ten thousand e-mails, calls, or chat messages a day. Representatives offer overnight shipping to quicken delivery and will call other retailers to find out-of-stock products. Some representatives have spent hours on the phone to assist callers, which the company encourages in its quest to provide exceptional service. Layoffs in 2023 lowered the number of employees dedicated solely to customer service responses, but the team remains large.
Zappos also fosters a quirky work culture. At the Las Vegas headquarters, employees do the wave at a moment's notice, participate in spontaneous parades, and celebrate Tutu Tuesdays. Employees follow ten core values, including embrace and drive change. Workers in training are even offered a quit-now bonus if they realize they may not fit in with the offbeat atmosphere.
Through these activities, Zappos promotes a fun and collaborative workplace that motivates employees to do their best. In 2009, the company first appeared on Fortune's list of the 100 Best Companies to Work For. It has since been named to the list several more times.
The company started the Zappos Insights department in 2008 to teach managers and employees at other businesses how to emulate its culture. The Zappos Insights program offers company tours, question-and-answer sessions, and training camps.
Zappos has also made bold moves in the corporate world. In 2013, Hsieh announced the company was scrapping its organizational structure. Zappos abandoned all job titles, including Hsieh's own title of CEO. Employees operate on equal footing in a self-governing system known as holacracy. In 2014, the company stopped posting open positions on job-search websites and instead vets candidates through its own social network, Zappos Insiders. The company continues to push itself to "Deliver wow."
Bibliography
Abel, Katie. "Shopbop CEO Kim Fleissner Will Lead Zappos Too, Scott Schaefer to Exit." Yahoo Finance, 27 Sept. 2024, finance.yahoo.com/news/exclusive-shopbop-ceo-kim-fleissner-233233885.html. Accessed 23 Jan. 2025.
"About Zappos." Zappos, www.zappos.com/c/about-zappos. Accessed 23 Jan. 2025.
Auriemma, Adam. "Zappos Zaps Its Job Postings." The Wall Street Journal, 26 May 2014, www.wsj.com/articles/SB10001424052702304811904579586300322355082. Accessed 23 Jan. 2025.
Eng, Dinah. "Nick Swinmurn: Zappos' Silent Founder." Fortune, 5 Sept. 2012, fortune.com/2012/09/05/nick-swinmurn-zappos-silent-founder/. Accessed 23 Jan. 2025.
Gordhamer, Soren, and Paul Zelizer. "The New Social Engagement: A Visit to Zappos." Mashable, mashable.com/2009/04/26/zappos/#okz6xJwCDkqV. Accessed 23 Jan. 2025.
Hsieh, Tony. "How I Did It: Tony Hsieh, CEO, Zappos.com." Inc., 1 Sept. 2006, www.inc.com/magazine/20060901/hidi-hsieh.html. Accessed 23 Jan. 2025.
Jacobs, Alexandra. "Happy Feet." The New Yorker, 14 Sept. 2009, www.newyorker.com/magazine/2009/09/14/happy-feet. Accessed 23 Jan. 2025.
Michelli, Joseph A. The Zappos Experience: 5 Principles to Inspire, Engage, and WOW. McGraw-Hill Companies, 2012.
Parr, Ben. "Why Amazon Bought Zappos." Mashable, 22 July 2009, mashable.com/2009/07/22/amazon-bought-zappos/#UVsCQA76DSqj. Accessed 23 Jan. 2025.
Pontefract, Dan. "What Is Happening at Zappos?" Forbes, 11 May 2015, www.forbes.com/sites/danpontefract/2015/05/11/what-is-happening-at-zappos/#237ceb5e4ed8. Accessed 23 Jan. 2025.
Taylor, Bill. "The Leadership and Artistry of Tony Hsieh." Harvard Business Review, 30 Nov. 2020, hbr.org/2020/11/the-leadership-and-artistry-of-tony-hsieh. Accessed 23 Jan. 2025.
"What Is Zappos Insights?" Zappos Insights, www.zapposinsights.com. Accessed 23 Jan. 2025.