A few day ago we heard the official confirmation from Amazon:
"Amazon today announced that it has reached an agreement to acquire Quidsi, Inc., which operates Diapers.com, an online baby care specialty site, and Soap.com, an online site for everyday essentials.
Under the terms of the agreement, which has been approved by Quidsi's stockholders, Amazon will acquire all of the outstanding shares of Quidsi for approximately $500 million in cash, as adjusted for the assumption of options and warrants, and also assume approximately $45 million in debt and similar obligations."
Observers are considering the valuation to be relatively low and are attributing this to the price war that Amazon had started in advance:
"What is perhaps most surprising about the deal is the seeming low-ball acquisition price of $540M for a rumored $300M revenue rate ( just a 1.8x revenue multiple.)
There are reports that Amazon was cutting out the legs of Diapers.com by selling diapers at a loss."
The acquisition was preceded by reports from CNN Fortune predicting the takeover of Quidsi, which have been running Diapers.com since 2004, Soap.com since June 2010 and since some weeks BeautyBar.com.
Exciting Commerce had also made remarks last October on the Amazon/Diapers relationship (German link) in response to the cover story of Business Week last month (“What Amazon Fears Most”).
Besides their customer focus, Diapers.com is distinguished by their obsession with technology:
"So before we launched, we built proprietary software from scratch. We built software with computational algorithms to determine what the optimal number of boxes to have in the warehouse is and what the sizes of those boxes should be.
Should we stock five different kinds of boxes to ship product in? Twenty kinds? Fifty kinds? And what size should those boxes be?
Right now, it's 23 box sizes, given what we sell, in order to minimize the cost of dunnage (those little plastic air-filled bags or peanuts), the cost of corrugated boxes, and the cost of shipping. We rerun the simulation every quarter."
Exciting Commerce’s Jochen Krisch dedicated an article in Internetworld Business early this year on some of the success factors of Diapers.com (German link).
Further reports on Diapers and related topics:
- Soap.com and the Online Supermarkets of the Future
- BabyAge Raises $15 Million for the Fight Against Diapers.com
- The Fastest Growing US Private Companies in 2010
Originally posted in German by Marcel Weiss in 2 parts (1, 2), adapted for excitingcommerce.com by Jason Soo.
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