Zappos.com has secured $20 million in equity funding from Sequoia Capital and increased its line of credit with Wells Fargo to $40 million to help finance its rapid growth, which is on course to rise 150% this year to more than $175 million from $70 million last year, the retailer says. Zappos says it will use the new capital to continue adding to its product offerings and improve customer service.
Although Zappos sells mostly shoes, its long-term strategy is to build its reputation as a provider of excellent customer service as a base for becoming a general merchandiser. It added handbags as a second category earlier this year, and it’s eyeing apparel as a possible third category, CEO Tony Hsieh tells Internet Retailer. “Eventually, we’d like to sell everything,” he says.
But he adds that Zappos will only add products as it identifies demand for them, and that in the near term it’s more concerned about continuing to improve customer service. The retailer, which offers free shipping on all orders and all returns, continues to add to its approximately 100-person customer service staff, hiring about five people every two weeks, Hsieh says.
Michael Moritz, a partner with Sequoia who has joined the Zappos board of directors, says Sequoia gives the retailer high marks for service. “They may sell just shoes and handbags today, but in the long term, the brand will be about the service, not about the shoes,” he says. “We think there is an opportunity here to create a long-lasting, compelling consumer brand focused on service.”
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