Zappos Magic

'The privately held Las Vegas company (whose name comes from the Spanish word for shoe) gets raves from shoe lovers for its fast, free shipping--90% of orders arrive the next business day--and a 365-day return policy that allows footwear fans to order a bunch of shoes, try them on and return those that don't suit or fit. Three-quarters of sales are from repeat customers.

Zappos keeps its inventory handy in two warehouses, totaling 1 million square feet, in Shepherdsville, Kentucky, just a 15-minute drive from UPS' world shipping hub. Trucks ferry all types of kicks, from Crocs to Christian Lacroix stilettos, to and from the UPS hub all day and night. Shipping, which cost $100 million last year, eats into margins--the nine-year-old company didn't turn a profit until 2007--but Hsieh insists it's worth every penny. "It creates a 'wow' experience and generates positive word of mouth," he says.'

Read how Zappos does it all, here.