|Wed June 30 2010 20:37:05|
Amazon Acquires Woot - More than a Daily Deal Site
By: Ina Steiner
I just got off the phone with Matt Rutledge of Woot, who sounded remarkably grounded after making what must be one of the biggest deals of his life: Matt sold his company to Amazon.com for an undisclosed amount (or, as Matt said in his announcement, a Hyundai full of twenties). While Woot.com is best known as a daily deal site - the granddaddy of them all, in fact - Woot is much more than that.
Woot is a wholesale distributor, acquiring inventory from manufacturers and selling it through a number of channels: the Woot.com daily deals site - now its largest channel; Fulfillment - selling on a drop-ship basis for other retailers; and selling directly to other retailers, including online and offline and well-known chains.
Among the ways Amazon could leverage Woot:
- Amazon could use Woot's distribution channels to sell its returned goods;
- Amazon could use Woot's relationship with manufacturers to acquire inventory to sell on its own platform.
- Amazon gains greater insight into wholesale and retail channels, which could help it with its current business and help it spot new opportunities.
But it's that second point that may give third-party sellers on Amazon.com pause, even though Amazon is already a commercial customer of Woot. Matt said simply that Woot would operate as a separate company - it will become a subsidiary of Amazon and the deal wouldn't change much - it would simply help Woot grow faster.
I'm not sure Amazon Marketplace sellers will be reassured, however. Some are already concerned about competitive pricing from Amazon's Warehouse Deals, as written about in this discussion thread on the Amazon boards.
Last year, Amazon acquired Zappos, which has a reputation for being customer focused, and Matt said that Woot is on the opposite end of the spectrum - Woot gives value to the customer in price and entertainment, but "works hard to keep expectations low," unlike Zappos. But, he said, they don't have unhappy customers - in that sense, the customer experience is identical, he said.
(I am reminded of liquidators who felt unwelcome on eBay beginning in 2008 - eBay was unable to figure out how to manage diverse customer expectations, a reason Woot will likely always operate as a separate company.)
Who might be the next Zappos or Woot? Matt said Amazon appears to look for well run, fast-growing companies.
Here's a link to the a letter from Matt announcing the sale, written in classic Woot style - it's that irreverent tone that keeps customers coming back to Woot to shop.
As he said in his letter, "for Woot, our vision remains the same: somehow earning a living on snarky commentary and junk."