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Wed June 30 2010 20:37:05

Amazon Acquires Woot - More than a Daily Deal Site

By: Ina Steiner

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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.

Low Expectations
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." 




Comments (7) | Permalink

Readers Comments

Amazon Acquires Woot - More than a Daily Deal Site   Amazon Acquires Woot - More than a Daily Deal Site

by: TekGems

Wed Jun 30 21:01:49 2010

Woot is their most famous brand at the moment, but W54 and Synapse Micro (synmicro) leaves a lot to be desired of. I've bought from their wholesale operation before and as a b2b customer, I felt cheated enough times to stop doing business with them. Every time I would buy something in bulk, they would not disclose shipping cost ahead of time, then when I was given the invoice, the shipping was above and beyond what a b2b should be paying. Shipping should be a pass-through cost for b2b not a profit center.

Amazon made a terrible buy. Woot has the fun factor and is fine for b2c, but they are not a good company to work for b2b.

Amazon Acquires Woot - More than a Daily Deal Site   Amazon Acquires Woot - More than a Daily Deal Site

by: summer in the city

Thu Jul 1 11:31:35 2010


''Matt said Amazon appears to look for well run, fast-growing companies.''

Amazon should look at Artfire!

With a staff of merely ten souls, they're providing a more advanced product than Etsy and its 85 slackers.
(Or maybe 84: there's one engineer there who apparently does something.)

The Artfire team has it all.

I have no connection whatsoever with Artfire BTW but after this many years in business, I know a good recipe when I see it.



Amazon Acquires Woot - More than a Daily Deal Site   Amazon Acquires Woot - More than a Daily Deal Site

by: Jessy S.

Thu Jul 1 13:56:27 2010

This is a horrible deal for Amazon.com.  I don't know where they god the idea to acquire a daily deals site... Mmm... Maybe eBay.

For the record, eBay does have a daily deals situation, but their deals come from companies pushing new items dirt cheap and is a partnership between the people and the eBay diamond seller.  Woot's business is buying discontinued items at bargain basement prices.  While there is a return situation on a eBay Diamond seller listing, Woot's customer service is nonexistent except for its membership and its FAQ which tells the person with buyers remorse to sell it on eBay.

Analysis: I can see John Donahoe laughing as he tells his executive assistant to put out a press release telling how "Jeff Bezos and Amazon have to react to eBay."  Amazon does have a daily deals site, but it isn't as noted as eBay's so they acquire another site that they will put on the back burner.

Finally, there is the issue vs Yahoo.com.  The sellout.woot site is going strong as of now and you can bet your booties that there will be a lawsuit when it comes to that partnership.  And finally, there is the partnership between Yahoo and eBay when Yahoo shut down their auction service.

Amazon Acquires Woot - More than a Daily Deal Site   Amazon Acquires Woot - More than a Daily Deal Site

This user has validated their user name. by: Nan
Web Site

Thu Jul 1 14:52:28 2010

Shoot - between Amazon and Google, they're going to run the whole internet.

Amazon Acquires Woot - More than a Daily Deal Site   Amazon Acquires Woot - More than a Daily Deal Site

by: Digby
Web Site

Thu Jul 1 15:13:41 2010

Funny
Not much interest (very few comments) on this post by Ina.
Nor was there much interest in the report on the online selling conference (when I thought there would have been !)

You said you were going to do a detailed report on that conference with 500 exhibitors.

But when ever it comes to ebay - the comments come rollng in!

Amazon Acquires Woot - More than a Daily Deal Site   Amazon Acquires Woot - More than a Daily Deal Site

This user has validated their user name. by: Ina

Thu Jul 1 16:51:39 2010

Hi Digby,
The IRCE conference wrap-up is here:
http://tinyurl.com/29y2r74
(Sorry, you'll have to cut and paste.)
Ina

Amazon Acquires Woot - More than a Daily Deal Site   Amazon Acquires Woot - More than a Daily Deal Site

by: Samuel
Web Site

Thu Jul 8 22:06:38 2010

Why Some Companies Make the Leap... and Others Don't.... This is it.



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