Amazon is shutting down its Quidsi division, the parent company of six e-Commerce sites, including Diapers.com and Soap.com. The e-Commerce giant bought Quidsi for $545 million in 2011, but revealed in a statement that the business hasn’t been profitable.
There is no confirmation of when the six Quidsi-affiliated sites will shut down, but once they do, their products will be stocked on Amazon.com. Quidsi’s programmers will shift their focus to the AmazonFresh grocery service, which is testing “AmazonFresh Pickup” in two separate Seattle locations.
More than 260 employees at the Quidsi headquarters and customer service operation in Jersey City, N.J. will lose their jobs in June, according to a notification sent to the New Jersey Department of Labor. The notice indicated that some of them will be able to apply for other positions at Amazon.
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With Amazon recently purchasing Middle Eastern e-Commerce retailer Souq.com for $650 million, the retail industry now has a chance to see how another large acquisition plays out for the e-Commerce giant. Souq.com is presently the dominant online retailer in the Middle East, enabling Amazon to use the brand as a launch pad for expansion in the region.
It’s too early to say whether Amazon will achieve significant Middle Eastern growth, but Souq’s high brand recognition in the region is likely to provide a better long-term investment for Amazon than the Quidsi acquisition did. It also remains to be seen whether Amazon will choose to build out its own branded presence in the Middle East.
The Quidsi move also shows that Amazon is very willing to cut ties with a brand even if it has already paid large sums of money for it. The e-Commerce giant likely gathered plenty of data and knowledge from Quidsi team members in the seven-year span since purchasing the company, so it makes sense to integrate its merchandise now under the Amazon brand.
The decision to close Quidsi has a coincidental tie-in with Amazon rival Walmart, which has bolstered its own e-Commerce stature with acquisitions of its own over the past year, including its $3.3 billion purchase of Jet.com. Marc Lore, the Founder and CEO of Jet.com and President and CEO of Walmart’s U.S. e-Commerce operations, founded Quidsi in 2005 as a direct competitor to Amazon in the baby and health products categories.
Although Diapers.com found success offering free delivery of diapers, Amazon began discounting diapers below the Diapers.com prices, starting a price war with Quidsi that the latter couldn’t recover from. This led to Lore and Co-Founder Vinit Bharara reluctantly selling Quidsi and its businesses to Amazon before exiting the brand in 2013.
