Amazon to shut a $1/2 billion business down as it doesn’t make any money

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Amazon are shutting down a raft of sites including daipers.com and soap.com that they acquired in 2010 as part of the Quidsi deal for about half a billion dollars. Amazon have already (since 2014) started selling their own brand of nappies so will doubtless attempt to convert customers to the core Amazon.com website.

Amazon said in a statement “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. 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“.

It’s unusual to see Amazon concerned about profits, they’ve run for years with little returns for investors focusing on growth instead. There comes a time however when you have to look at a business unit and wonder if it will ever make money and this appears to have happened.

Of course it’s quite possible that Amazon never expected to make a profit and simply bought the businesses to kill off a competitor always with the intention of rolling the customers into the Amazon fold. If that was the case, they might be slightly regretting letting Marc Lore, Quidsi founder, leave Amazon in 2013 as he promptly set up Jet.com, now owned by Walmart who are Amazon’s biggest rival in the US.

Amazon wins online, but Walmart is by far the biggest bricks and mortar retailer in the US (and own Asda in the UK). As Amazon turn their sights more heavily on the Pantry, grocery and Fresh produce markets and branch out into physical stores (albeit with interesting ways to shop), Walmart will increasingly be the competitor that worries them the most.

Amazon haven’t confirmed when the Quidsi websites will go offline, but if you’re a customer I suspect that soon you’ll find an enticing offer winging your way tempting you to become an Amazon Prime customer.

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