3 ms·

Reading the Ecomom story it reminds me of Zappos. That company too was losing a lot of money. It only sold to Amazon after their investors refused to put more m

Reading the Ecomom story it reminds me of Zappos. That company too was losing a lot of money. It only sold to Amazon after their investors refused to put more money in. The Ecomom story is pretty mind boggling from a sound business perspective, but then so is Zappos. And look how celebrated Tony Hsieh is. And guess who was also an investor in Ecomom?

gokhan 13y ago
I think Zappos' and Ecomom's stories are way different. Are you referring to the info in the Zappos' book, delivering Happiness?
- theflyingkiwi42 13y ago
  Yes, I am. I am sure there are big differences (especially in the outcome) but both were losing money in the hope of building an audience, and to lower costs later. As Hsieh wrote: "Zappos sells shoes and apparel online, but what distinguished us from our competitors was that we'd put our company culture above all else. We'd bet that by being good to our employees -- for instance, by paying for 100 percent of health care premiums, spending heavily on personal development, and giving customer service reps more freedom than at a typical call center -- we would be able to offer better service than our competitors. Better service would translate into lots of repeat customers, which would mean low marketing expenses, long-term profits, and fast growth. Amazingly, it all seemed to be working. By 2005, gross merchandise sales were $370 million, and we made the Inc. 500. We weren't profitable yet, but we were close to breaking even, and our revenue was growing quickly." http://www.inc.com/magazine/20100601/why-i-sold-zappos.html http://www.inc.com/magazine/20100601/why-i-sold-zappos.html Seems pretty similar to me. The only difference is that Zappos went after a much larger market.
  - fyi80 13y ago
    Where is the part where Hsieh wrote that he sold each item at a marginal loss?
  - vessenes 13y ago
    I believe these are very different situations -- Zappos was covering some, nearly all of their SG&A with product margins. Ecomom was, according to the information in the link, needing to pony up cash to cover negative margins on product sales.

gokhan 13y ago

I think Zappos' and Ecomom's stories are way different. Are you referring to the info in the Zappos' book, delivering Happiness?

theflyingkiwi42 13y ago
Yes, I am. I am sure there are big differences (especially in the outcome) but both were losing money in the hope of building an audience, and to lower costs later. As Hsieh wrote: "Zappos sells shoes and apparel online, but what distinguished us from our competitors was that we'd put our company culture above all else. We'd bet that by being good to our employees -- for instance, by paying for 100 percent of health care premiums, spending heavily on personal development, and giving customer service reps more freedom than at a typical call center -- we would be able to offer better service than our competitors. Better service would translate into lots of repeat customers, which would mean low marketing expenses, long-term profits, and fast growth. Amazingly, it all seemed to be working. By 2005, gross merchandise sales were $370 million, and we made the Inc. 500. We weren't profitable yet, but we were close to breaking even, and our revenue was growing quickly." http://www.inc.com/magazine/20100601/why-i-sold-zappos.html http://www.inc.com/magazine/20100601/why-i-sold-zappos.html Seems pretty similar to me. The only difference is that Zappos went after a much larger market.
- fyi80 13y ago
  Where is the part where Hsieh wrote that he sold each item at a marginal loss?
- vessenes 13y ago
  I believe these are very different situations -- Zappos was covering some, nearly all of their SG&A with product margins. Ecomom was, according to the information in the link, needing to pony up cash to cover negative margins on product sales.