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In a swoop that marks the largest acquisition in its 14-year history, Amazon is purchasing online shoe retailer Zappos.com for $847 million in cash and stock.

Amazon is best-known for successfully peddling books, DVDs and electronics, but it does have an apparel section. Some years ago, it attempted to compete directly with Zappos in footwear with the launch of Endless.com, which has seen limited success, reports The Wall Street Journal, quoting analysts.

Online apparel, footwear and accessories are a $23 billion business; in contrast, personal computers total $16 billion in business a year and consumer electronics garner merely $11 billion, Forrester says.

Amazon CEO Jeff Bezos praised Zappos for being "a customer-focused company." The latter was founded in 1999 and has carved a niche by prioritizing quick and friendly customer service, extensive employee training, and free shipping and free return shipping.

It is often also cited for its use of Twitter. Zappos employees are encouraged to create Twitter accounts and be ever-watchful of issues that might arise associated with the Zappos experience. For his part, CEO Tony Hsieh tweets generously under the pseudonym "zappos" — publishing quick notes about both the company and life.

Zappos is backed by VC firms like Sequoia capital. The company enjoyed over $1 billion in gross merchandise sales in 2008.

In a letter to employees, published on the Zappos blog, Hsieh described the Amazon liaison in detail, seeking in particular to correct the impression that the firm had been acquired by Amazon — a description that, while "technically correct," doesn't "really properly convey the spirit of the transaction."

"[All] of the existing shareholders and investors of Zappos (there are over 100) will be exchanging their Zappos stock for Amazon stock. Once the exchange is done, Amazon will become the only shareholder of Zappos stock," Hsieh wrote, assuring readers that Zappos will continue to operate "the way we have always run Zappos."

"From a practical point of view, it will be as if we are switching out our current shareholders and board of directors for a new one, even though the technical legal structure may be different," he explained.

Hsieh said the liaison will enable Zappos to accelerate its growth; Amazon has also committed to support Zappos' decision to operate as an independent entity "under the Zappos brand and with our unique culture."

He also assured employees they are in no danger of losing their jobs.

A value of $807 million in shares will be exchanged for the full acquisition of Zappos. Employees of the latter will also receive $40 million in cash and restricted stock units. Lazard Ltd. advised Amazon on the deal; Morgan Stanley advised on the Zappos end.

According to Bezos, Amazon will continue to operate Endless.com.