Amazon Expands E-Commerce Push With $850 Million Zappos Buy

Amazon on Tuesday said it has agreed to acquire apparel and footwear retailer Zappos.com for more than $850 million in cash and stock, expanding Amazon's use of separately branded sites to entice the increasing number of consumers buying from the Web.

Under the agreement, Amazon would trade 10 million shares valued at $807 million for Zappos.com stock. In addition, Amazon would give Zappos.com employees $40 million in cash and stock. Privately held Zappos.com has more than 100 shareholders and investors. The deal is expected to close in the fall.

Amazon plans to operate Zappos.com as a separate brand, keeping its management in place and letting it continue to operate out of its Las Vegas, Nev., headquarters. Zappos.com isn't the only separate brand run by Amazon. The retailer has its own shoes and handbags site called Endless.com.

Amazon is expanding its use of separate online stores at a time when some brick-and-mortar operations, such as Mervyn's, have been forced to close during the current economic recession.

In a letter to employees, Tony Hsieh, chief executive of Zappos.com, said the time was right to join Amazon.com.

"There is a huge opportunity to leverage each other's strengths and move even faster towards our long term vision," Hsieh said. "For Zappos, our vision remains the same: delivering happiness to customers, employees, and vendors. We just want to get there faster."

As a wholly owned subsidiary of Amazon.com, Zappos.com would not be folded into Amazon's operations, so no layoffs were planned. "Your job is just as secure as it was month ago," Hsieh said.

Attend a virtual event on driving business value and customer value in the global economy. It happens July 29. Find out more and register.