Commentary

Amazon Buys Social Media... I Mean, Zappos

So there I was yesterday afternoon looking for a column idea (as anyone who follows me on Twitter knows), when out of the blue came this: Amazon buying Zappos for $850 million, give or take. While most of the business stories I've read so far have covered this as an online retail story, with Amazon getting its, um, foot in the door of apparel with the acquisition of this renowned online shoe store, to many of us this is a social media story. To a greater extent than almost any previous company, Zappos is the story of a company built on social media.

 

When I asked for comments on Twitter yesterday about the role of social media in building Zappos' brand, I got two responses almost immediately which actually turn what I just said on its head a bit:

From George Nimeh (aka @iboy), managing director at Iris Digital in London: "SM didn't help build the brand. SM is their brand ... because SM is about people, and therefore intrinsically customer centric."

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And then, from Communispace CEO Diane Hessan (@CommunispaceCEO): "SM didn't build the brand. Tony [Zappos CEO Tony Hsieh] & co understood HOW 2use SM 2embrace their customers-vs others who use the SAME tools & get 0."

So, let's not call Zappos a company built on social media exactly, but a company that saw social media as a platform it could leverage to bring to full fruition a unique, customer-centric culture. That's a mouthful, but a more accurate description. As Hessan said to me in further correspondence: "At the end of the day, it's almost never about the technology."

In fact, if you look at Zappos' customer service approach from end to end, one of its key tools isn't Twitter -- even though hundreds of company employees use it -- but this thing called the telephone, which may rank as the original social platform. What comes through each platform is the message that the customer comes first.

When I contemplate the Zappos brand (I'm not a big shoe buyer, so therefore, not a customer), what comes through is this: I first heard of it through social channels, probably Twitter, and mostly because I saw recommendations to follow Tony Hsieh, who now has more than a million followers. (Take that @aplusk!)

Which makes sense, because Zappos has never really marketed in the way most of us perceive marketing: as messages pushed out in one direction, in the hopes that people will pay attention to them. (It actually feels odd to me that the company launched an agency review recently. Agency review? Talk about kickin' it old school!) But until now, at least, Twitter has been one of its mass media, as have its unleashed customer service reps -- who can talk to customers for as long as is necessary -- and its word-of-mouth.

Using social tools, Zappos has built a mass brand, using thousands of incremental actions to achieve reach. As should always be the case, its broad use of social tools comes straight out of its culture, expressed as ten core values that include "Build Open and Honest Relationships With Communication" and "Create Fun and a Little Weirdness."

In fact, the biggest concern I've read so far about the company selling to Amazon is that it will destroy Zappos' culture. (All sides promise that it will continue to operate independently, and retain its distinctive focus.) But in reading the early comments about the deal, it's almost as though Amazon wants a bit of Zappos' social media stardust to rub off on it.

"Zappos is a company that I have long admired and for a very important reason," said Amazon CEO Jeff Bezos, in a video to Zappos employees. "Zappos has a customer obsession which is so easy for me to admire. It is the starting point for Zappos. It is the place where Zappos begins and ends. And that is a very key factor for me. I get all weak-kneed when I see a customer-obsessed company, and Zappos certainly is that."

Remember that old Nike commercial where Spike Lee, in character as Mars Blackmon, says, "It's gotta be the shoes"? Well, with Zappos, it's gotta be the social.

12 comments about "Amazon Buys Social Media... I Mean, Zappos ".
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  1. Brian Allman from Sweet Spot Golf LLC, July 23, 2009 at 1:17 p.m.

    I love this discussion and it's obvious proof that this new platform/media outlet works. BIG hand clap for Zappos, that's an amazing payday! However, I struggle every day with making our start up company, an unknown brand, have value in our conversations on-line. Quite honestly, what would be helpful, I'm sure to many of your readers, is to hear in more detail or citing some specific examples of "what specifically worked for them" and why it set them apart from all others?

  2. Shelly Kramer from V3 Integrated Marketing, July 23, 2009 at 1:20 p.m.

    Catharine,

    I love your commentary and always make sure to read it (admitting publicly to girl crush-haha). To be honest, when I saw the news about Amazon I was a little sadden. Like your headline, my first thought is that Amazon is trying to buy its way into social media via the Zappos acquisition. And, I'm not sure I feel about Zappos "selling out."

    But one thing I know for sure, times they are a' changing at the veritable speed of light - so I'm content to sit back and see what happens. Whether, as they claim, Zappos will "retain it's distinctive focus" or ... well, not. The thing I love most about social media is its transparency. So, we'll know, sooner or later -- and probably sooner -- how much this acquisition will change Zappos ... or Amazon. Or not.

    Thanks again for terrific post.

  3. Jay Davis from --------, July 23, 2009 at 1:47 p.m.

    I know we're all in a rush to dub some organization the poster child for SM success, but this really isn't it. Zappos didn't build their success with SM -- at least not in the online sense. Not at all in fact. They struggled to find their way for years before they hit their magic formula: Customer Service. Plain and simple. That's why 75% of their shoppers are repeat customers -- they have practically built a continuity-style product with good old one-on-one service. FREE shipping on orders AND returns?? So simple but brilliant. And huge.

    Your column is long on "thoughts" and short on substance in the area of SM success... how exactly did SM play any sort of role at all? A quick check on FB shows a scant number of fans or app users. The Twitter action is likely mostly people like us (marketers) following Hsieh... and a recent development to be sure... Twitter was nothing until a very short while ago. Zappos has been on this road for quite some time. As well, Zappos has done their share of mass marketing. Haven't seen their TV spots? Check YouTube. I've been a customer for a while and trust me, they use tried and true marketing tactics just like anyone else. Can't count the DM pieces I've gotten or emails.

    I suppose what I'm trying to say is, don't be so quick to crown someone/thing an overnight success in what is still an unproven and minimally monetized medium. That overnight success was years in the making. They put their shoes on 1 foot at a time just like the rest of us... the only magic is hard work and appetite for risk.

  4. Jonathan Hutter from Northern Light Health, July 23, 2009 at 1:54 p.m.

    $850 million give or take. What's $3 million among friends?

    I agree with those who say that social media is just the platform, and it isn't that new. It's just done well enough to make someone a LOT of money.

  5. Andres Santamaria from Signal 29 LLC, July 23, 2009 at 1:55 p.m.

    Is it reasonable to say that just because a company uses Twitter that it was their use of social media that catapulted them to success or recognition? There are tons of companies that not only use Twitter, but also Facebook and every other social site out there.

    A couple months ago Inc. magazine profiled Zappos. I suggest reading it before jumping to the conclusion that social media was the reason for Zappos growth. Here it is - http://www.inc.com/magazine/20090501/the-zappos-way-of-managing.html.

    Zappos is an ecommerce company with amazing customer service which happens to use Twitter (Facebook also). By the way, did anyone actually read Jeff Bezos comments on why Amazon acquired Zappos. It is because of their great company culture and outstanding service. That's it. No social nothing. Any Zappos customer would know that.

  6. George Nimeh from KURIER, July 23, 2009 at 2:10 p.m.

    Jay, Andres, and others:

    I don't think anyone is saying that social media and Twitter were the *only* reasons for the acquisition. I think we're saying that their clever use of social media has contributed to the success of the brand. Social media is obviously all about people (we called it 'community' a decade ago) and thus naturally fits in with a company strategy predicated and built on customer service.

    At its foundation is an obsession with the customer:
    http://www.i-boy.com/weblog/2009/07/importance-of-having-customer-obsession.html

    And I believe customer service is one of the 5C's of doing business on Twitter:
    http://www.i-boy.com/weblog/2009/02/5c-on-using-twitter-for-business.html

    So as for Twitter, specifically, it may be "nothing until a very short while ago", as Jay suggests, but there are now 1,025,349 people are following Zappos on Twitter ... and I'm sure they're not all marketers, as he suggests. Some of them are marketers. A healthy percentage are advocates. Many of them are customers. All of them are interested in the brand.

    Of course, that's a lot to say in 140 characters ...

    @iboy

  7. Jay Davis from --------, July 23, 2009 at 4:35 p.m.

    Well, George, try as you might, I think you'd be hard pressed to find an actual financial analyst who thinks Tony Hsieh's 1MM Twitter followers had a single blessed thing to do with the acquisition. And I would add, a single blessed thing to do with Zappos' success, despite every SM jock-sniffers' assertions to the contrary.

    "...clever use of social media..." How so? What's clever about Hsieh's lunch plans? His thoughts on children's games? That's essentially the content of his Twitter feed. None of it has anything to do with the Customer Service mantra they have effectively used to guide them in their success. You're trying to equate social media marketing and customer service and the logic just isn't there.

    The fact of the matter is that few if any organizations of scale have or can use media such as Twitter for anything other than another push message platform. It's targeting capabilities lie in the process of self-selection, that is, users choose to follow individuals/organizations that are already of interest to them. If an organization is to be successful with this tool, it requires recognizing this and using it in an appropriate manner... not just as a platform to "cleverly" tweet about packages of underwear on your desk (a funny from Tony). That serves no one, least of all a *customer*.

    The point of all this being that this topic really has no place in a column titled "Social Media Insider". And those who are desperately searching for a model to tout as "successful" in this space need to keep looking.

  8. Swag Valance from Trash, Inc., July 23, 2009 at 5:50 p.m.

    I'm not sure I agree with the SM angle. My Zappos awareness primarily came from two sources:

    1. Heavy old-school advertising in magazines the likes of The New Yorker
    2. Tech blog feature articles, which is appropriate for my professional field

    Neither of which constitute a strong SM story.

    But like the author, I've never bought from Zappos. But not because I don't have a shoe fetish. While they've done a great job presenting a customer service value, I've found their inventory to be horribly lacking with little "long tail" to distinguish them from any retailer I could find in a suburban shopping mall.

    You can win all the CS accolades you want, but I would never recommend Zappos to a friend -- leaving me in the negative Net Promoter score column -- because they don't sell anything I would want to buy. Even as hard as I've tried to find something there.

    Few things are as frustrating to retailers, and consumers, as honestly wanting to find reasons to like a business, but finding no reason to do business with them.

  9. Evan Brownstein from Bright Monkey Marketing, July 23, 2009 at 9:25 p.m.

    This could be oversimplifying, but, as Siegel+Gale might say, perhaps we could benefit from a bit of oversimplification these days...

    Isn't the soul of successful "social media" essentially getting people's attention, being relevant, and being responsive?

    Before conversation became a media platform, it was simply something in which people (and brands) engaged with one another.

    Want to execute social media as successfully as Tony Hsieh? Be interesting. Be relevant. Be of service. Be responsive. Be present. Or engage a bright marketing partner who can be these things for you. It is not complicated. There is no mystical magic.

    No business needs a "social media strategy." Every business needs a brand strategy and needs to participate in conversations with consumers ("social media") which are consistent with that brand strategy. Be interesting. Be relevant. Be of service. Be responsive. Be present.

  10. Allen Maccannell from SenderOK, July 24, 2009 at 2:24 a.m.

    Brian makes a good point. Zappos followed everyone possible on Twitter on the formula that at least 50% would follow back. Half of my Twitter accounts followed them and, because I didn't want to have them in all my feeds, I had to block them on other accounts.

    I think I read some interesting tweets there or I would not have followed back at all. Admittedly, just saying one thing that another finds interesting can establish your brand name in the other person's mind.

    But I only knew they sold shoes and clothing yesterday when I heard Amazon bought them.

  11. Allen Maccannell from SenderOK, July 24, 2009 at 3:01 a.m.

    If the aggressive Twitter following had been done by someone who was clearly not an interesting CEO of a known brand name corporation (even if I hadn't known until yesterday what the company's business was), they could have been blocked six ways to Sunday and Twitter may have deleted their account.

    We don't want this to be a lesson that tells every corporation to aggressively follow as many people as possible on Twitter and churn those who fail to follow by unfollowing and then following again and again until they give in and follow back. ;-)

    So, while I assume Zappos is a great company worth every penny of the purchase price, if any Amazon executive put a value on the number of Zappos Twitter followers and that was reflected in even $1M out of the $850M...then we are going to be facing a wave of aggressive follow tactics from others.

    It takes skill to *reduce* your followers to those who actually read what you write. My company's Twitter following is half of what it would be if we didn't block spam followers aggressively (blocking lowers the follower stats). More than 50% of the people on Twitter are trying to sell you programs to get more followers or trying to get you to see their photos.

    Of Ashton Kutscher's 2.4Million followers it seems logical that 1Million are spammers who never read his tweets.

    Knowing that, does it mean my company's value on Wall Street should be lower because I delete half the followers? Or should I post more aggressively and follow everyone and anyone?

    And that is not a rhetorical question.

    I've proven on practice accounts that it is easy to get thousands of Twitter followers (follow aggressively and post aggressively in terms of frequency and controversiality). Yet our corporate account has only 800 qualified non-spammer followers, thankfully with some well-qualified potential corporate customers.

    Then again...our corporate account has actually been targeting top executives (in the email deliverability business) and not the general public that we could also be approaching via another more aggressive account.

  12. George Nimeh from KURIER, July 25, 2009 at 9:02 a.m.

    A couple replies:

    To "Swag Valance", who isn't sure he agrees with the SM angle and then says that one of the two things that contributed to their success is "Tech blog feature articles, which is appropriate for my professional field" ... "Swag", does this mean you don't consider feature articles on blogs to be social media? Huh? What?

    Allen MacCannell, I think you are dramatically underrepresenting the quality of the conversation and utility that Tony and Zappos have created using social media. The buzz about Zappos is palpable on Twitter and elsewhere and was so well before the Amazon acquisition. If people were only following or tagging along because they had been followed, there would be no conversation. People are actively engaged with the brand.

    Evan Brownstein, I agree completely ... Social media is a part of the whole. It is not a stand-alone activity.

    Jay Davis, you write: "Few if any organizations of scale have or can use media such as Twitter for anything other than another push message platform." ... I suggest you check out JetBlue, for starters. There are many many many others. You just need to look around.

    What's funny is that I'm a self-acknowledged half-reformed Twitterphobe and yet I'm the one defending their business. It is nascent yet has massive traction. To ignore it or shoot it down just because no one has figured it out from a commercial perspective (which I don't think isi entirely true) is naive and short-sighted. It shows such a lack of creativity and strategic insight and reminds me of how music execs reacted when they first heard of the MP3 or how many mobile phone manufacturers reacted when they first encountered the iPhone.

    And Jay, I find your tone and language anything but "social" ... I'm here trying to have a conversation, and you're using phrases like "SM jock-sniffers" to describe things. I doubt you talk to the Blue Elephant dogs and cats that way, so why bring it in here? ... Grow up.

    @iboy

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