Zappos.com Update - March 11, 2010

I sent the following email to our "Friends of Zappos" mailing list today:

Dear Investors, Employees, Partners, and Friends of Zappos:

It's been awhile since I last sent an update to our "Friends of Zappos" list. So much has happened over the past year!

Despite a tough economic environment, we continued growing in 2009, finishing the year doing nearly $1.2 billion in gross merchandise sales.

As many of you know, back in July 2009 we announced that Amazon was acquiring Zappos:  http://blogs.zappos.com/ceoletter

The transaction officially closed on November 1, 2009. True to their word, Amazon has continued to allow us to run Zappos independently, with our own unique culture, brand, and way of doing business. From our point of view, it's been as if we swapped out our previous board of directors with a new one, but we now have access to a lot more resources so we can continue to build the Zappos business even faster. In fact, over the past few months, we've actually seen our growth rate accelerate compared to the prior year.

In January, we were excited to learn that we made Fortune magazine's "Best Companies to Work For" list again, moving up 8 places to the #15 spot!

A few weeks ago, I had the opportunity to present to about 2000 people at Amazon's "All Hands" meeting in Seattle, in which I talked about our focus on the 3 C's at Zappos:

- Clothing

- Customer Service

- Company Culture

As many of you know, we're making a big push into apparel (which is 4 times the size of the footwear market) as well as other product categories including bags, accessories, and housewares. We think we're just at the tip of the iceberg of what's possible as we continue to build the Zappos brand to be about the very best customer service and the very best customer experience.

The slides from my talk at Amazon are available here:

http://www.slideshare.net/zappos/zappos-amazon-022510

Our sister web site, 6pm.com, has been growing even faster than Zappos.com. From a business perspective, it's been a great way to clear out the older and discontinued inventory that we didn't sell through on Zappos.com.

You can take a look at the 6pm site here: 

http://www.6pm.com

Over the past year, we've made many, many improvements to the Zappos.com web site. If you haven't visited us recently, I would definitely encourage you to play around with the latest incarnation of our web site:http://www.zappos.com In addition to better navigation and a new look and feel, in 2009 we added over 10,000 video product descriptions to the site, and we plan on adding over 50,000 more this year.

We also relaunched our couture web site:

http://couture.zappos.com 

And we relaunched our Zappos Insights web site, where we share how to build strong company cultures with other businesses: http://www.zapposinsights.com

I'm also excited to announce that we have just started a new TV ad campaign, featuring puppets and real phone calls to our (unsuspecting) Customer Loyalty Team:

http://www.nytimes.com/2010/03/05/business/media/05adco.html 

Here's the first of our TV spots (with more to come):

http://www.youtube.com/watch?v=KXbhw3TJhoM

Probably the biggest question I've gotten lately has been "How's the Amazon acquisition been? How have things changed?"

The truth is, there have been a couple of minor annoyances. We're now part of a public company, so moving forward, we aren't able to disclose our financial numbers as freely as we were able to do before (but that would have happened anyway had we gone public on our own). We also have more travel restrictions for various legal and tax reasons.

On the flip side though, we've retained our independence and our culture is as strong as before the acquisition. We've been learning a lot from each other and the new partnership has enabled us to move even faster towards the Zappos vision of delivering happiness to the world.

Over the next several months, I'll be focusing a lot on a personal project of mine: the launch of my first book, "DELIVERING HAPPINESS: A Path to Profits, Passion, and Purpose". The official launch date is June 7, 2010, but I'll be traveling around the country to promote the book both before and after the launch date.

If you're interested in keeping up with the progress of the book, you can visit the book's web site and sign up to receive updates by email and/or Twitter: http://deliveringhappinessbook.com You can also pre-order the book on Amazon: http://amazon.com/deliveringhappiness

The goal of the book is to inspire other companies to think about how to they can use happiness as a guiding principle to make customers happier (by focusing more on customer service) and employees happier (by focusing more on company culture), which ultimately can lead to sustainable profits and long-term financial performance.

It's hard to believe that Zappos will turn 11 years old this year. Going through the process of writing the book made me realize how much we've been through, yet things are as exciting as ever because there's so much growth and opportunity ahead.

Thank you everyone for all your support through the years. We couldn't have gotten this far without you -- there's a lot more to come!

---------------------

Tony Hsieh

CEO - Zappos.com, Inc.