Zappos sheds its Kentucky warehouses

Zappos.com CEO Tony Hsieh announced Wednesday that the company will be handing its Kentucky operations over to parent company Amazon.com.

Hsieh said in a letter to employees that the decision is a result of the company's focus on downtown Las Vegas redevelopment efforts and its impending move of 1,300 workers from Henderson into the former City Hall building.

Zappos has two warehouses in Shepherdsville, Ky., that it had expected to soon outgrow. Rather than buy another warehouse, the company decided to fold its distribution facilities into Amazon's existing network, Hsieh said.

Amazon acquired Zappos in 2009. Zappos will retain control of its 6pm outlet store in Kentucky.

Hsieh said about 2,000 Zappos employees will by September transfer to Amazon, a move which comes with a 5 percent average bump in overall compensation.

Though the changes are happening far from Las Vegas, they will have big ramifications for the company's headquarters city.

"This allows us to focus more on what we're doing for our campus relocation," Hsieh told the Review-Journal.

The company now will enlist the help of Craig Adkins, who was overseeing Kentucky operations, for downtown redevelopment efforts. Adkins will contribute his warehouse and logistics knowledge to startups affiliated with the Downtown Project, a Zappos-related revitalization group led by Hsieh.

He also may help with the fashion incubator to be housed in the Annex building across the street from the new Zappos headquarters on Las Vegas Boulevard. The incubator also is part of the Downtown Project.

Zappos is adding a photo studio to its downtown headquarters for clothing and product video shoots. The studio is an expansion, Hsieh said.

Hsieh, in his note to employees, said the addition is part of the planned growth of the Zappos merchandising and buying teams in Las Vegas.

"This is all part of our strategic plan for Zappos to help transform downtown Vegas into a hub for entrepreneurs," he wrote.

Shedding its Kentucky operations does not mean that Zappos will be giving over the rest of its business to Amazon. Operations in Las Vegas and San Francisco, where the company keeps a small tech team, will continue to be run independently of the online behemoth.

"This is being driven by the fact that Amazon is extremely excited about our efforts to revitalize downtown Vegas and set the stage to ultimately bring more technology and innovation to the Vegas community, which will only help Zappos in the long run," Hsieh wrote.

Contact reporter Caitlin McGarry at cmcgarry
@reviewjournal.com or 702-387-5273.