Amazon in $850 Million Deal for Web Shoe Store Zappos

Amazon.com says it is buying Zappos.com, an online shoe store, in a deal worth about $850 million.

(Video: CNBC's Jim Goldman breaks down Amazon.com's purchase of online retailer Zappos.com.)

Amazon says it will buy Zappos for about $807 million in stock, and also will pay $40 million in cash and stock to Zappos employees. The deal is expected to close this fall.

Zappos' management will continue to run the company from Las Vegas.

Amazon already operates its own shoe and handbag shop under the name Endless.com.