Amazon Is Slowly Dismantling Tony Hsieh’s Version Of Zappos, Louis Vuitton Doubled Sales
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Amazon's impact on Zappos is already visible through slowdowns. Louisa Vuitton tries to maintain an atmosphere of exclusivity.
Layoffs at Zappos
Zappos laid off more than 300 employees last month, about 20% of the Las Vegas-based company's workforce. Zappos' cuts were part of wider layoffs at Amazon, which are expected to cut more than 18,000 employees, which the daily said will affect about 5% of its corporate ranks. They are also the latest in a series of moves from longtime parent company Zappos.
Among the significant changes at Zappos is the departure of Tyler Williams, a long-time Zappos executive and Hsieh's right-hand man for many years, who left the company during the latest round of layoffs, according to people familiar with the companies.
Some of the recent layoffs at Zappos involved customer service representatives, a department.
Zappos spokeswoman Laura Davis said the January cuts were part of Zappos' regular business planning. As for the customer service department, she said the cuts were "finally put in place to ensure Zappos is set up to continue to deliver exceptional customer service in the long term."
Amazon and Zappos
Hsieh agreed to sell Zappos to Amazon on the condition that the company would operate independently. For years, he worried about what Zappos employees called "Amazon creep," a reference to Amazon's executives becoming more involved and imposing a more traditional management style on them, according to former Zappos employees.
Some Zappos divisions have already been incorporated into Amazon. Other changes have been more symbolic: recently, Amazon has largely replaced Zappos' distinctive white branded boxes with the parent company's standard brown packaging.
According to former Amazon employees, it put pressure on Hsieh and his team until 2019 to meet certain growth goals. Since Hsieh's departure, Zappos has been experiencing internal turmoil.
Overall, Amazon is much more involved with Zappos and its business decisions than it was when Hsieh headed the company. Zappos is now profitable, although it still hasn't met all of the growth targets Amazon has set for it.
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Amazon share price
Amazon shares in early February reached its highest trading level since November last year at 112.91. Then the decline will begin and recently the share price closed below 100.00, at 97.61.
Louis Vuitton made a show
Louis Vuitton has built a huge makeshift warehouse in the courtyard of the Louvre to house a recent menswear show.
Even by the standards of the fashion world, the show was an exaggerated spectacle - one that paid off handsomely for the company. According to Launchmetrics, which assigns a monetary value to every article, post or interaction about a brand or event, the show garnered more attention than any other brand during January's Paris Men's Fashion Week. $27.2 million in so-called media impact value is 91% more than last year's Vuitton show.
It was proof that the business strategy had worked: the luggage and handbag company had established itself as the most powerful luxury goods brand in the world.
LV gains
Last month, the owner of a handbag maker said Louis Vuitton would reach $20 billion in revenue in 2022. It was just four years after the brand became the first in the luxury industry to reach $10 billion in annual sales. Louis Vuitton has benefited from a boom in luxury spending since the pandemic.
The brand is now entering a critical phase. Former Louis Vuitton CEO Michael Burke and executive vice president Delphine Arnault, Arnault's daughter, handed over leadership earlier this month. The takeover will be handled by Italian CEO Pietro Beccari, the outgoing head of Dior, LVMH's second-largest brand. The change in leadership brings new economic pressures
Louis Vuitton share price
Louis Vuitton shares hit a high at EUR 829.40. Similar to Amazon shares, LVHM shares started their decline after peaking and recently closed below EUR 800 at 799.90.
Source: wsj.com, finance.yahoo.com
