amazappos.com

I hope I’m wrong about this one.

One exceptional service organization purchased another yesterday, and I’m fearful for the final result. I’m not a believer in big-merger-as-corporate-strategy, and think most tend to destroy more shareholder value than they create.

I think it’s particularly dangerous when the organizations merging are differentiated on the basis of their service culture.

Amazon.com is a leader in creating technology that enables the service experience. From the algorithms that make ever intelligent point-of-purchase suggestions based on my product preferences, to the self-service technology that creates a credible, user-friendly experience that I have absolute confidence in, Amazon.com uses technology as well as anyone to add delight to the retail experience. They account for the bulk of my online shopping.

My Zappos knowledge is limited. One flawless service experience, little interaction with their famous world-class service. It is an environment where, like Amazon, the service promise is fully enabled to be kept, but in Zappos case, it is people that do it. Zappos relies on a corporate culture that is not the same as other online retailers. They work to hire great people that are service-oriented first and foremost. They rely on the employees to provide exceptional service and form close relationships with the customer.

What is clear about the models is that they are both excel at making service promises and keeping them, but where Amazon uses technology, Zappos uses a workforce that is widely regarded as exceptional amongst its peers and across industries.

As it stands, Amazon is reporting that service operations will not be integrated, that they will operate as standalone businesses, and that the deal is not about synergies. In my opinion, the cost savings associated with a shift from the people-driven service model to the technology-enabled service are too easy to identify. As a result, Zappos operations will eventually be integrated into Amazon. If so, it will ruin the element of the experience that differentiated Zappos from every other online retailer, including Amazon.