Amazon to Shut Down Unprofitable Quidsi Division -- Update
30 March 2017 - 8:57AM
Dow Jones News
By Laura Stevens
Amazon.com Inc. said Wednesday it is shutting down the company
behind Diapers.com that it bought for more than $500 million
because it was unprofitable.
Amazon struck a deal for Quidsi, which also ran Soap.com, in
late 2010 after it rose to prominence shipping diapers and other
household staples largely for free -- a segment in which Amazon was
also fiercely competing.
"We have worked extremely hard for the past seven years to get
Quidsi to be profitable, and unfortunately we have not been able to
do so," an Amazon spokeswoman said.
Quidsi's goods will be sold on Amazon.com, she said. Its
software development team will be moved to AmazonFresh, the
company's grocery division, she added.
Amazon is laying off 263 employees, some of whom will have the
opportunity to apply for other jobs within the company, according
to a document filed with the New Jersey Department of Labor and
Workforce Development.
"It probably makes sense from a cost and logistical perspective
to integrate the operations, including the brands," said Colin
Sebastian, an analyst with Robert W. Baird & Co.
Other than Diapers.com, the sites haven't been generating a lot
of traffic, and much of it was referrals back and forth from
Amazon.com anyway, he added. In addition, many of Quidsi's product
categories are ones Amazon plans to delve into with its Fresh
grocery business.
Quidsi was co-founded by Marc Lore, who stayed with the company
for about three years after Amazon's acquisition. Mr. Lore went on
to found Amazon rival Jet.com, which was acquired by Wal-Mart
Stores Inc. last year for $3.3 billion -- the largest price ever
paid in a U.S. e-commerce startup acquisition. He is now head of
Wal-Mart's U.S. online operations.
Quidsi's Diapers.com, which launched in 2005, helped prove that
consumers would buy household products online if a broad selection
was paired with free, fast shipping. By the time of the acquisition
in late 2010, however, Amazon had undercut its competitor on diaper
prices and launched a service that offered free two-day shipping
for new parents for three months or more.
The Quidsi developers will be working on a current focus for
Amazon: food and groceries, as it seeks a bigger share of consumer
spending. Amazon's Fresh delivery service is available in more than
20 markets, and the company said this week it will open two
brick-and-mortar pickup locations in its hometown of Seattle. At
the stores, customers will be able to pick up groceries in as
little as 15 minutes.
But unlike the free delivery that was part of Quidsi's original
pitch to consumers, AmazonFresh comes with additional fees. The
company charges an extra $14.99 a month on top of its $99 annual
Prime membership fee for the service.
Write to Laura Stevens at laura.stevens@wsj.com
(END) Dow Jones Newswires
March 29, 2017 17:42 ET (21:42 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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