Parent Company of Diapers.com & Soap.com to be Acquired by Amazon

13


Fortune is reporting that Amazon is acquiring Quidsi, the parent company of Diapers.com and Soap.com, in a $540 million acquisition. This is a cash deal, and the founders of Quidsi have been reportedly signed to employment contracts by Amazon.

I think this is a very smart move by Amazon, and it follows the company’s acquisition of online retailer Zappos, which was announced about 15 months ago. The two companies have continued to run separately after that acquisition, and I would imagine Amazon will continue to leverage the Diapers.com and Soap.com brands as separate business entities.

It was just a few months ago (in July of 2010) that Quidsi launched Soap.com. At that time, it was reported that Diapers.com had revenue of over $300 million annually.

As I mentioned previously, Quidsi’s business model seems very similar to TABcom, LLC (known before as PetsUnited), the $100 million+ company that operates Dog.com, Horse.com, Garden.com, Fish.com, and many more e-commerce websites on generic domain names. I wonder if Amazon will give Alex Tabibi a call in the near future.

13 COMMENTS

  1. @ dean
    Last i read diapers.com was not profitable.
    If what you are saying is true they probably had no choice.
    Cant lower prices on a business that already doesn’t make any profit.

  2. I don’t know how much money you can make by selling diapers. But one would have to imagine the margin is extremely low. Half a billion dollars cash in exchange for diapers. I’d take the money and run. Congratulation to the founders.

  3. Awesome news and generic .com domain names! .com is king and its about businesses. IMO they must have reported some sort of a profit or the purchase price would not be out there in that range.

    .COM is king folks

    Now we can read soon how people have IHaveDiapers.Com and there value went up and Diapers.Co, Soap.Co and how values shot up, LOL..

  4. This looks like more evidence that Amazon sees the value of domain names as federated brands. Amazon is increasingly looking to me like a platform and an operating system for commerce.

    The domain alone would have been worth $1-2 million at best. With an operating strategy it became a brand which in turn made it worth materially more.

    Textbook example of what is possible through effective development of eCommerce brands that get traction. Predatory pricing action by Amazon is certainly a subject to watch.

  5. The reason Quidsi wasn’t profitable was because it was expanding. A lot of companies find it difficult to grow and expand while maintaining profitability.

  6. It would be interesting to browse a list of top generic domain names owned specifically by larger companies. Over the past decade, a good number of them have been acquired often because they fall right in the middle of a company’s main business focus.

    At other times, the acquired domain seems rather outside of anything the company has been involved in. But obtaining the top domain creates an instant inroad for the company into an industry.

    Geo domains fit into this model too whereby a person/company buys the city.com, joins AC, and they attain instant clout within a geographical area. Not to say that’s a formula for instant success, but it is the single most powerful step in a longer range plan.

  7. Amazon is really the biggest game in town regarding ecommerce.

    I promote many products as an affiliate marketer, and I have seen amazon conversion rates of 30%-50%, while I see conversion rates with other retailers in the single digits. Amazon is a master at up-selling, cross-selling, and gaining the trust of the typical Internet user to fork over her credit card.

    If Amazon can afford to undercut other merchants, it is because they have done the right kind of marketing to build a business that can afford to offer lower prices.

Leave a Reply