Will Amazon pull a Quidsi on Zappos?

Amazon.com will officially close Diapers.com and the other sites operated by Quidsi tomorrow after the company, which it acquired in 2011, failed to turn a profit. While the decision surprised some, it certainly didn’t qualify as a shocker. But what if Amazon announced it planned to do the same with Zappos.com? Shelly Banjo, a Bloomberg columnist, wrote that the combination of Quidsi’s closing and the recent letter from Amazon CEO Jeff Bezos offering his views on accepting failure led her to question what part of the e-tailing giant’s business was most likely to be jettisoned in the future. Her conclusion — Zappos. The heart of Ms. Banjo’s argument is that when Amazon acquired Zappos, the company was, similarly to Quidsi, a “formidable contender” that offered Amazon new talent and knowledge that it did not possess on its own. Now that Amazon has built its own shoe business — it’s the number one seller of footwear online, according to Slice Intelligence — and taken what it needed from Zappos, it could just fold the business. Looking more closely at Slice’s data shows that Amazon and Zappos are the top two sellers of footwear online. In 2014, Zappos held a 19.8 percent share of the market, slightly ahead of Amazon at 19.0 percent. Since then, Zappos has seen its share slip to 15.1 percent while Amazon has risen to 26.3 percent (for the three months ending 3/31/17). It appears that at least some of Amazon’s gains have been at Zappos’ expense. So, it is plausible that Amazon may choose to “Quidsi” Zappos.

Merchant Name	2014	2015	2016	2017
Amazon	19.0%	23.1%	24.9%	26.3%
Zappos.com	19.8%	15.5%	15.2%	15.1%
Copyright © Slice Intelligence 2017. Jan. 1, 2014 - Mar. 31, 2017. n=1,240,904 U.S. online shoppers

On the other hand, Zappos has something Quidsi did not — brand equity built on a culture of customer service that has resulted in legions of fans. True, Zappos' eroding share numbers indicate it has lost some of its edge. Management has responded with a new loyalty program and increased promotional activity, including its “Friends with Benefits Road Show.” Will these efforts be enough in the end to help Zappos regain lost market share? Will Amazon eventually put Zappos on its list of not so fast failures?

• What does the decision to close Quidsi say about the battle between Amazon and Jet.com? – RetailWire
• The Next Shoe to Drop at Amazon – Bloomberg
• Will Zappos reap rewards from its new loyalty program? – RetailWire
• Zappos takes to the road to connect with consumers – RetailWire