Amazon announced that is closing Diapers.com, Soap.com, and other sites to eliminate competitors and gain e-commerce customers. Jeff Bezos‘ company purchased those sites in 2011 for $545 million.
The company said it is shutting Quidsi, the unit that administered the sites because it couldn’t make a profit. However, e-commerce analysts believe Amazon intended to close down the sites at some point, to benefit from being the only mainstream site available to purchase the products.
“They sucked out any knowledge that the team had and now they’ll put it behind the Amazon brand and steamroll those categories,” said Allen Adamson, founder of Brand Simple Consulting in New York, according to Bloomberg Technology.
Diapers.com and other sites will close
Over 260 employees in Quidsi’s Jersey City, New Jersey, will lose their jobs in June, according to information sent to the New Jersey Department of Labor. The employees from Quidsi’s headquarters and customer service operations will have the opportunity to apply for other jobs at Amazon, according to the notification sent. Quidsi also has employees working in warehouses in Kansas and Nevada.
Closing the unit is the latest development in the feud between Amazon’s founder Jeff Bezos and Quidsi’s founder Marc Lore. Quidsi engaged in a price war against Amazon in previous years, until the U.S. recession pushed Lore to sell the company to Bezos. Lore worked for Amazon until 2013 as part of the arrangement.
Lore started a new e-commerce site in 2015 called Jet.com, and he publicly challenged Amazon again. He ended up selling Jet.com to Walmart for $3.3 billion in 2016. Lore currently runs e-commerce operations for Walmart, Amazon’s principal competitor, and the world’s biggest retailer.
Quidsi specialized in particular products, while Amazon’s inventory is near infinite. Diapers.com and other Quidsi sites were facing weak sales as Amazon’s sales went up. Amazon is the biggest e-commerce retailer in the world, as online shopping has gradually become the easiest shopping method for customers.
This year Quidsi’s baby product sales declined to 2 percent, according to data compiled by Slice Intelligence. Quidsi’s sales for baby products in the same quarter in 2014 stood at 9 percent.
Amazon released a statement claiming that it worked extremely hard since acquiring Quidsi to make the unit site profitable.
Grocery market is Amazon’s new horizon
Amazon’s brand experts continue to look for inventory to sell on the e-commerce site, and its software developers are focusing on AmazonFresh, the grocery’s division. Jeff Bezo’s company is launching an experimental convenience store and grocery pickup kiosks in Seattle to expand the department.
Matt Sargent, senior vice president of retail at Frank N. Magid Associates, believes that the Quidsi shut down is not a coincidence, according to Bloomberg.
“Amazon is closing Quidsi in order to pull Quidsi users into the Amazon ecosystem,” said Sargent to Bloomberg Tech. “Amazon wants to be the single easy place to go for everything. The timing is not coincidental as Amazon wants to bring more attention to its specific brand entities in areas like grocery where it wants to expand.”
Source: Bloomberg Technology