Zappos, the sell out?

The recent acquisition of the online giant Zappos by Amazon points out one undeniable thing - Zappos was competition. Why else would the online retail giant spend nearly 40 million dollars in cash and restricted stock and a whopping 10 million more Amazon shares (nearly a billion dollars in all) in order to purchase the upstart? For retailers building their online presence, this can be boon or an indication that the playing field may be shrinking.

Why the Zappos purchase is bad

The problem with such a huge conglomerate like Amazon - which gobbles up specialized retailers in order to add to the products they sell (and strengthen the categories where they have the most competition) - is that their high profile can make it harder for smaller retailers to make their presence known. Where Zappos spent considerable time to become a common search word, now Zappos means Amazon, and until another retailer takes the mantle we will all be drinking from the Amazon well for quite a while.

There is still hope for small etailers

But then again, online shoppers love the underdog. Like mom and pop stores of yesteryear, online retailers who build a trustworthy presence and a personalized touch can fill a niche market. Popular stores like Jildor, another shoe retailer, and local bath and body stores like Sabon in New York City are two examples of smaller companies making a concerted effort to build their online presence. Whatever the goal - growing to be like Amazon or to be bought by them - it’s clear that online is the way to go.

And yet …

Despite all these upcoming sites, the Internet is becoming like the off line world where the richer get richer; joining others to become larger than life. There is merit in that the Internet is no different from the offline world. But still, one wish that Zappos didn’t sold out. Could it mean long term they were in trouble? Hmmm ….