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Amazon, Zappos and Buying What You Can’t Compete Against

Amazon bought Zappos. At first I was a bit surprised. Like an aging celebrity going to the “big theater in the sky” it is unexpected when you first hear about it – but upon reflection not surprising at all. It smacks of inevitability.

Amazon has consistently displayed a genius for pushing the boundaries of their business – for syndicating their strengths and making them a commodity for others to purchase. Are they a bookseller, an ecommerce platform, a cloud service provider, a consumer electronics company etc.?

Along the way Zappos has shown the same genius – taking Amazon’s competence syndication strategy one step further. When they launched Powered by Zappos they allowed smaller merchants to overlay their brand on top of the entire Zappos supply chain and, more importantly, on top of Zappos’ legendary customer service. Zappos was syndicating the entire experience.

Much of the online conversation is taken up with worries that Amazon will not abide Zappos’ culture. I feel quite the opposite. I believe culture is exactly what Jeff Bezos and Amazon were buying (after all it likely wasn’t fulfillment centers, logistics, inventory or even customers). Culture is the one asset Amazon couldn’t compete against.

It was a smart move.

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