Walmart Buys Them, Amazon Shuts Them Down
As reported today by Bloomberg, Amazon has decided to shut down its Quidsi division, owners of Diapers.com and Soap.com in a cost-cutting move.
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In 2011 Amazon acquired Quidsi for $545 million from founder Marc Lore after a bruising battle over market share in those niche segments. Marc Lore continued working for Amazon until 2013 and after leaving Amazon opened Jet.com in 2015.
From the beginning, Jet.com was billed as the next Amazon competitor. The company received significant outside funding, signaling that investors had a lot of trust in Marc Lore.
Ironically Walmart bought Jet.com from Marc Lore in 2016 for $3.3 billion and hired him to operate Walmart’s floundering eCommerce business.
Since Jet.com became a division of Walmart, it has acquired a number of smaller niche eCommerce players. Recent acquisitions include Modcloth, Hayneedle, ShoeBuy and Moosejaw.
Much of Walmart’s strategy seemed to mimic Amazon’s early strategy with its purchase of small popular eCommerce niche sites. However, today Amazon admitted that the Quidsi division just was not profitable and decided to refocus the development team.
“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,” Seattle-based Amazon said in a statement. “Quidsi has great brand expertise and they will continue to offer selection on Amazon.com; the software development team will focus on building technology for AmazonFresh.”
A Hidden Message for Amazon Investors?
There is a second message in this closure that is very unfamiliar to Amazon investors. For years Amazon has never worried that much about making money.
While Amazon’s financials have looked much better recently and the stock is continuing to rise to record highs, admitting a division was not financially viable and acting upon that is pretty new territory for Amazon.
It will be interesting to watch if there are any other hidden problem divisions at Amazon that management finally decides just need to go away.
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Richard is co-founder of eSeller365. He has over 17 years of experience on eBay which includes tens of thousands of sales to buyers in over 100 countries and even has experience with eBay’s VeRO program enforcing intellectual property rights for a former employer. And for about two years Richard sold products on Amazon using Amazon FBA in the US.
To “relax” from the daily business grind, for a few weekends a year, he also works for IMSA as a professional race official.