Why Amazon bought Diapers.com
The tech-savvy retailer goes back to basics by buying a company specializing in soap and diapers.
Plenty. Because for all the talk about new technologies, Amazon still has an important business selling staples to families. And a company that uses computer algorithms to stock warehouses and distribute diapers will melt Jeff Bezos' heart any day of the week.
Amazon spent $540 million in cash to buy Quidsi, who owns the Diapers.com and Soap.com operations. That's about $200 million more than what Quidsi was previously valued at, Fortune reports.
Amazon shares were up just slightly Monday after the buyout was confirmed. Here's what others are saying about the acquisition and why it's important to Amazon's business:
Sales. Quidsi reported $180 million in revenue last year, and said that would grow to $300 million this year, The Wall Street Journal reports. Post continues after video:
Hooking the buyer. While $300 million in sales is just a drop in the bucket, these sales are recurring -- a big deal to Amazon. The company wants repeat buyers, and has aggressively pushed its subscription program for coffee and other staples. Diapers are a perfect product for long-lasting, predictable and repeating sales.
Grabbing women buyers. Women are the household decision-makers, and Amazon is courting them. The company launched a new program this year called Amazon Mom, which sells discounted diapers and wipes with free two-day shipping.
Beating Wal-Mart (WMT). Wal-Mart was reportedly also interested in Diapers.com. One more way for Amazon to knock out a competitor.
Fortune describes Quidsi as "a rapidly growing company with a devoted base of customers that has figured out how to warehouse and ship commodity items quickly and profitably." If that's the case, Diapers.com should fit nicely into the retail base Amazon is building.
The deal has some similarities to Amazon's purchase of Zappos.com, a shoe company the company bought for $1.1 billion in 2009.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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