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Wed July 22 2009 22:30:36

eBay Loses Zappos with Amazon Acquisition

By: Ina Steiner

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While eBay's marketplace GMV continues to decline and the company is looking a bit tarnished, Amazon just scored a major coup by acquiring one of the coolest and beloved young brands around today - Zappos. The pending acquisition may also explain why Zappos abandoned the eBay marketplace after barely launching this spring.

According to a speech given by eBay Senior Vice President Stephanie Tilenius last month, Zappos had launched a Store on eBay to sell liquidation inventory using eBay's new Large Merchant Services API.
 
Tilenius heralded the Zappos brand on eBay during a speech at the Internet Retailer conference, but after the speech, Zappos denied they would be selling on eBay. Steve Hill, Vice President of Merchandising at Zappos, told AuctionBytes, "We did a small test on eBay but are not currently planning on moving forward with it." One can only surmise that Zappos backed away from eBay because of negotiations with Amazon.com.

Amazon has been a spoiler for eBay for a long time, having cherry-picked PowerSellers - independent Amazon sellers now account for 32% of all unit sales on Amazon, up from 25% five years ago, according to Peter Faricy, Amazon's VP of Seller Services. Of course, eBay was a major spoiler when it acquired Bill Me Later last year, an online payments company in which Amazon.com had invested but that is no longer welcome on the Amazon.com marketplace.

I heard Zappos CEO Tony Hsieh give a speech a few years ago. The culture at Zappos is young and hip, and they believe in doing anything and everything for the customer. Going to Las Vegas? Stop in to their nearby headquarters for a tour, he invited listeners.

One gets the feeling Bezos knows better than to mess too much with the Zappos culture, unlike eBay, who placed its own executives at the helm of new acquisitions and entrenched them in the eBay culture (ask the old PayPal gang how they felt post-acquisition).

Hsieh and Bezos couldn't be more different in style, but according to Bezos, it's Zappos customer  obsession that gets him weak at the knees.

Look for acquisition details in tomorrow's AuctionBytes Newsflash.
 




Comments (31) | Permalink

Readers Comments

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: John

Wed Jul 22 22:38:17 2009

The term "noise" appears to be branching out. jd's over bloated ego may now have to deal with noise of a different nature and strength.

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: Patricia

Wed Jul 22 23:15:56 2009

I love it!  Amazon crept up and stole Zappos right out of Ebay's clutches LOL.  They'll do a much better business on Amazon for sure and it will be a solid business deal and not one at the whims of a fanatic!

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: Rich

Wed Jul 22 23:51:43 2009

It's a win for Zappos. Amazon overpaid for them. So if you're a Zappos stock holder you've just robbed the bank!

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

This user has validated their user name. by: Mercy the Mingless

Thu Jul 23 00:25:33 2009

I hope someone tells Stephanie Tilenius.

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: summer in the city

Thu Jul 23 00:47:02 2009

Heh.

If Amazon starts an auction division, ebay is finished.

Now's the time, Jeff!

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: Trump

Thu Jul 23 01:03:37 2009

CEO Tony Hsieh has the personality of a dead fish ....a very wealthy dead fish now.

How these people get on in life is beyond me???...right place right time & right bankers

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: ebaysucks

Thu Jul 23 02:11:13 2009

hahaha!! Serves eBay right for being so stupid!!  eBay your days are numbered!  Go Amazon!!

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: ebaysucks

Thu Jul 23 02:22:47 2009

I think eBay tried to buy Zappos too but, Zappos decided to sell to Amazon instead because eBay has too many negative feedbacks and their DSR's were too low!!  Hahahahaha

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: Rich

Thu Jul 23 04:08:18 2009

ebay never tried to buy Zappos (so lets kill that made up rumor right now). They don't want to have stock of product on hand. That's why ebay has a boat load of $$ in the bank. No stock means no overhead. A pretty smart business plan.

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: lebennington

Thu Jul 23 05:20:32 2009

No stock means no overhead. A pretty smart business plan.

Too bad Ebay is treating the people with the inventory so poorly.  I wouldn't call that a smart business plan.

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: ebay profits are down

Thu Jul 23 05:56:05 2009

I used to work for a top 50 international company. One of its corporate strap lines was, ''we want to be a company that people want to exist''. I think Amazon are doing pretty well at that, they seem to treat customers and sellers with respect. Where as ebay, could rot in hell as far as I'm concerned. Anyway, nice one Amazon, well done on the timing of the announcement, a swift kick in the balls for JD.

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: unaware

Thu Jul 23 09:20:47 2009

summer in the city: I don't think you will see Amazon going back into auctions...  Bezos appears to me to be a bit of a control freak in how his customers are treated (and that is not all bad) and I don't think auctions would allow Amazon to control all aspects of the process as much as they can do now with fixed priced listings... too many variables. I think he is smart enough not to reintroduce the ''wild wild west'' aspect of auctions to Amazon again. BUT that does not mean Amazon could not get into auctions (as a holding company perhaps) by starting up or purchasing (or investing in) another company separate from Amazon but affiliated with Amazon. I guess it would depend on if he thinks it could make money and that it could be done CORRECTLY so that all involved could come out winners (buyers, sellers and them as investors/owners).

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: unaware

Thu Jul 23 09:29:48 2009

Well I was just put in my place... they were just talking about eBay on CNBC and the guest analyst stated that basically sellers on eBay don't matter... it's all about the buyer. If there is a buyer then a seller will always come along to meet that buyers demand. To me, it was the most bold statement yet by a ''outsider'' that eBay just does not want the small sellers anymore... eBay will never again be the place to go to find one of a kind items offered by one of a kind sellers...

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: Karma

Thu Jul 23 09:38:35 2009

@ unaware:
"BUT that does not mean Amazon could not get into auctions (as a holding company perhaps) by starting up or purchasing (or investing in) another company separate from Amazon but affiliated with Amazon."

How about Amazon buys Ebay ??? :-)

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: Ebay's Rich from cubicle 17, San Jose, CA

Thu Jul 23 10:46:48 2009

Good job, Rich from Cubicle 17, we all believe you that Ebay wanted this. Why just 2 weeks ago, Zappo's got a buttload of free publicity from Greedbay's Stupidnee Tilienius, and today they are sold to Amazon:) Great work, all at Feebay!

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: unaware

Thu Jul 23 11:10:12 2009

@Karma:
People have speculated about Amazon buying eBay but really Bezos is a pretty smart cookie... why on earth would he want to buy a company as screwed up as eBay? I don't think there is any doubt that Amazon has superior technology far exceeding anything eBay is working with. I think we can all agree that there is not much in the way of a management brain trust worth buying it for. There is no great advantage in picking up eBay's customer or buyer lists as Amazon probably has 80% of the same names already as their own customers or sellers. PayPal might be nice to have but Amazon has a pretty robust checkout and payment service of its own that just needs to get market penetration. No, I see no real advantage for Amazon to buy a bloated, behind the times eBay... I think Amazon would be much better to hook-up with a new, forward thinking auction company that they could partner with and mold in their own image.... but I think this is all fantasy as I think the auction format just might be a bit too messy for Amazon to even want to be involved in. Really, eBay blew it... THEY are the ones who should be the Auction format leaders but they are running away from it. If they had made the right moves 5 to 10 years ago and spent the money on the right things they might have been OK now but I am afraid the time has come and gone for eBay and Auctions.  

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: Former Ebay seller

Thu Jul 23 11:37:45 2009

I have shopped with Zappos in the past and they are a great company to deal with as a buyer.

I hope when everyone hears or reads that Zappos dumped ebay and went with Amazon,it will send a clear signal that something is severely lacking as to the way ebay is being run now.

Ebay has egg on it's face again. Hope the stockholders are watching.

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: RicRoe

Thu Jul 23 11:58:34 2009

Zappos has the right idea. They tested on eBay and found the test results unacceptable.

Rather than be a seller on eBay and be told by Donahoe & Co how to conduct every facet of their business, Zappos decided to be acquired by Amazon.

Once the aquisition is finalized Zappos will keep their successful team intact and operating as they do now.

Smart move for Zappos, leaving Donahoe & CO standing at the alter jilted and embarassed.

Kudos to Amazon as well. It's a great acquisition and the timing of the announcement was perfect..

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: Lisa@Handbags4Hunger

Thu Jul 23 13:36:05 2009

QUOTE by RicRoe "Smart move for Zappos, leaving Donahoe & CO standing at the alter jilted and embarassed."

Can I use this quote one on my blog? I LOVE IT! Just more egg on the face of eBay....

eBay Loses Zappos with Amazon Acquisition   eBay Loses Zappos with Amazon Acquisition

by: Another Wronged Seller

Thu Jul 23 13:40:29 2009

I think Zappos learned pretty quickly that it was betting on a dying horse.

Given a choice between selling on ebay and being micromanaged or getting acquired by Amazon, how many of us would pick Ebay? You wouldn't have to count too high past the few ebay cheerleaders.

Stephanie (put my foot in my mouth) announcement was probably the icing on the cake. Bragging about Zappos when Zappos probably wanted to test the market on the QT. I don't think anyone has ever discovered what seller ID they were using.

As far as the speculation that Amazon will either buy ebay or start auctions again, I don't believe it. Why would Amazon pay for ebay when much of ebays seller base has already migrated there. All they have to do is sit and wait as the gap between the two companies widens.

Ebay was the alpha dog in auctions for a long time and should have easily maintained that position through good decision making. A tweak here and there instead of the total re-vamp which I believe will ultimately be there downfall.

As the leader in auctions, they should have not only led there own company but also the auction format into the future. With the changes to their own company they have also severely damaged auctions as a format going forward.

When the market leader screws up, it can also damage the market as a whole.

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