Claiming a lack of profitability After its landmark purchase of Souq.com, the Middle East’s largest e-commerce site, this week Amazon has chosen to close down Quidsi, parent company of Diapers.com and Soap.com, because it has failed to reach profitability since Amazon acquired the company in 2010. Quidsi, founded by Jet.com CEO Marc Lore, was a $500 million purchase for Amazon, and its closing will cost 263 people their jobs.
There are six sites on the chopping block: Diapers.com, Soap.com, BeautyBar.com, Wag.com, Yoyo.com and Casa.com. “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,” said an Amazon spokeswoman. “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.” There is no set date as to when all of Quidsi’s affiliated sites will go down.
Quidsi’s original purchase was the product of its inability to raise more investment capital, and both Lore and Quidsi cofounder Vinit Bharara worked for Amazon until 2013 after Quidsi’s purchase. Lore is also Walmart‘s CEO of US Commerce and leads the company’s e-commerce initiatives in their highly competitive rivalry with Amazon. While Amazon appears to have closed down the Quidsi division for business reasons, it comes not long after Lore’s sale of Jet.com to Walmart for $3 billion, which closed last August.
Claiming a lack of profitability when analysts say Amazon loses big on Prime’s 2-day free shipping feature seems a bit sketchy, but perhaps Jeff “too much of a profit means you’ve lost an opportunity to grow” Bezos’ philosophy only applies to Amazon-branded properties. Amazon does seem to balance its losses with gains in other places, like its Amazon Web Service and merchant fees, and Amazon has been moving more toward technological pursuits, as well as its drive-up grocery store project. No numbers have been released regarding how much Quidsi was losing, but we’re relatively sure its closure is a carefully measured move by Amazon and not an act of spite against Marc Lore.