The end of the road for Zappos

There aren’t many companies that could challenge Amazon.com. Now there’s one less.

From its early days, Zappos was built to become the next Amazon. It picked one category – shoes – to hone a  relentless focus on customer service and create enough scale to become an online category killer. From there, like Amazon, it hoped to use its low-cost fulfillment system to move relentlessly across the ecommerce waterfront.

Not many pure ecommerce companies have made it to the $1bn revenue mark, so getting this far is quite a feat (our earlier coverage is here and here.)

That makes Zappos’ sale today to Amazon something of an anti-climax. True, the sale price – not far short of $1bn, when you add in the payment to employees – is confirmation of how far Zappos got in its 10 years.

But despite all the warm words and assurances from CEO Tony Hsieh, this looks like a fairly brutal consolidation play for Amazon, and the end of the line for Zappos. Jeff Bezos will be able to spread the costs of his company’s warehouses and technology platform across a broader sales base. Nor is there likely to be much that Zappos will be able to teach its bigger rival about customer service or the management of large-scale ecommerce operations.

In the pure-play ecommerce business, this looks like confirmation that Mr Bezos has won.