Zappos/Amazon = Incumbents Should Be Afraid

AMZN/Zappos is growing into more of a formidable competitor in softline retail than many people think. Hsieh' goal of $1Bn going to $5Bn would get this name in the top 5 apparel/footwear retailers by today's metrics. Only internet sales tax could slow this beast down.



Here’s some food for thought for all you Holiday on-line ‘shop-a-holics’. Remember Tony Hsieh? Yeah…he’s the dude that created Zappos from scratch, and ultimately sold it to Amazon last year for $888million.


We all knew the deal sounded expensive – but that’s without considering what Amazon would gain from the transaction – most notably talent to scale up both the footwear and apparel market. That’s about a $350billion opportunity.


To be clear, Amazon’s apparel offering in the past has been abysmal. It’s gotten a bit better, and will continue to do so. But Footwear has clearly improved at both Amazon (i.e. New Balance/Heidi Klum) and Zappos alike. There’s still a lot of room to go if AMZN ultimately wants to make money in footwear, such as weaning the consumer off the free-shipping model at Zappos – or getting smart with leveraging other ‘sticky marketing’ tactics (like Amazon Prime – which is evil for a shop-a-holic who’s trying to get sober).


Here’s a recent quote from Hsieh that is absolutely worth noting.


“For the next couple of years, we are moving into clothing. we started out in footwear but clothing is actually a much larger market. It should be enough to take us to $5 billion.” What does all that mean? He thinks that this deal will be a 5-bagger for his company. $1bn in sales going to $5bn?


Those are some mighty big numbers. Consider this…Zappos hitting $5Bn in sales would make it the 10th largest apparel/footwear retailer in the US. If you add in Core Amazon it climbs into the Top 5. 


Nothing says it all better than the picture below outlining Hsies’ collective vision with Amazon.



Zappos/Amazon = Incumbents Should Be Afraid - zap


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