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Amazon to buy Diapers.com for $540 million
- citricsquid 16y agoAh, so it's a business! From the title I thought it was just a domain purchase, that would be the greatest (disclosed) ever by a significant amount if it was.
- user24 16y agoyeah. I actually flagged the article because that headline is far too misleading (not themichael's fault).
- tvon 16y agoI'm surprised, diapers.com should be pretty well known to anyone interested in business or entrepreneurship.
- user24 16y agoShould it? Why? I have no kids and am in the UK. Is it a famous business case study? Even if it is, I'm a computer scientist not a business guy. The headline makes it sound like they bought the domain name for that figure, which is sensationalist and inaccurate.
- sparky 16y agoIf that's their company name ( http://www.diapers.com/aboutus/aboutus.aspx http://www.diapers.com/aboutus/aboutus.aspx ), that's their company name. Take it up with diapers.com (the company, not the domain name) if it's confusing. For the record, I agree with you, but a bunch of parenthesized "we mean the company, not just the domain name" seems superfluous given that the rest of the article is a click away.
- mbrubeck 16y agoAnd yet the headline didn't say "Amazon.com to buy Diapers.com"... ("Amazon.com, Inc." is the name of the company.)
- CapitalistCartr 16y agoYeah, it's nice to be so famous you're known by your first name only. Cher, Rosanne, Oprah.
- martinkallstrom 16y ago"Amazon buys Diapers for $540 million" would also have been a set up for misunderstandings in it's own way.
- nostromo 16y agoThey got a lot of press (at least in the US) for their innovative procurement robots... that's how a lot of kidless American geeks found out about their success. http://singularityhub.com/2010/06/10/whats-the-secret-behind-diapers-com-success-a-kiva-robot-warehouse-video/ http://singularityhub.com/2010/06/10/whats-the-secret-behind...
- tvon 16y agoMaybe I shouldn't go so far as to say what others should know, but I don't have kids either and I'm aware of Diapers.com, and I'm more developer than business man (or at least I suck at being a business man). I certainly don't think the title is sensationalist, but for the sake of clarity (given the up/down votes of complaints such as yours) perhaps it should have been made more clear that a company was purchased and not a domain name. On the other hand, would there be any confusion if it was Zappos.com?
- araneae 16y agoI heard of Diapers.com from HN, and I've seen several articles about it on here, so I don't think it's an unreasonable assumption to make. Diapers.com is a big competitor for Amazon.com on the baby stuff, so it's a good acquisition for them.
- mahmud 16y agoWasn't broadcast.com sold for 5 billion?
- prs 16y agobroadcast.com was a company, not a domain name alone.
- omarchowdhury 16y agonow it's just a domain name that redirects to yahoo homepage
- evgen 16y agoHaving been at Y! when broadcast was bought and having seen behind the curtain, I think you are seriously overestimating what was purchased...
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- prs 16y agoA bit of a background on diapers.com - referred to in the article - Recommended Read. http://www.businessweek.com/print/magazine/content/10_42/b4199062749187.htm http://www.businessweek.com/print/magazine/content/10_42/b41...
- hristov 16y agoYou gotta have nerves of steel to start an Internet business with your own money where you ship stuff out and lose money on each thing you ship. Or maybe you have to have a lot of money.
- vaksel 16y agothey sold another business prior to this, so it's probably the latter
- rubyrescue 16y agoany HNers with experience w/Amazon "price bots"? When Quidsi launched Soap.com in July, adding an additional 25,000 products to their lineup, the site was strafed almost from the minute it went live by price bots dispatched by Amazon. Quidsi network operators watched in amazement as Amazon pinged their site to find out what they were charging for each of the 25,000 new items they initially offered, and then adjusted its prices accordingly. Bharara and Lore knew that would happen. "If we put something on sale, we usually see Amazon respond in a couple of hours," says Bharara. Or as Rohan puts it: "A price bot attack truly is the sincerest form of flattery."
- timmins 16y agoWhen we had our child and found diapers.com, I was convinced it was already an amazon company. diapers.com has great customer service and an unreal shipping policy. I guess it was a matter of time but it makes complete sense to me just like Zappos. Amazon buys company cultures, not businesses.
- djb_hackernews 16y agohmm, I always figured it was fulfilment companies that got picked up by Amazon. If you can move volume, and have loyalty, Amazon wants to know how.
- privacyguru 16y agoGreat company and a great business success story. I guess Amazon doesn't fear Diapers.Com Anymore! Excellent story over at Businessweek on the company: http://www.businessweek.com/magazine/content/10_42/b4199062749187.htm http://www.businessweek.com/magazine/content/10_42/b41990627...
- jakarta 16y agoI'd be really interested in seeing how much equity the founders have left in the business. It's definitely not capital light, so I can imagine that they had to raise quite a bit of money to get it off the ground and running.
- ceejayoz 16y agoI actually read an article on how Diapers.com got started. It was a couple folks in a garage. P&G and the other diaper manufacturers wouldn't talk to someone so small, so they got warehouse club memberships and just bought mass quantities to mail out. At times, they apparently bought out the BJs and Sams Clubs within a 100 mile radius. They were doing it all on credit cards in their own cars and rented U-Hauls. Here's the article: http://www.bloomberg.com/news/2010-10-07/diapers-com-takes-on-amazon-in-huggies-delivery-time-smackdown.html http://www.bloomberg.com/news/2010-10-07/diapers-com-takes-o...
- kingkilr 16y agoTwo of my cousins own a vending machine business and for certain products they do the same thing (buying out Sam's Clubs). Why? Sam's Club volume is so much higher than theirs that even after Sam's Club tacks on their markup, it's cheaper for them to buy through them than to go to the manufacturer. It's always funny to go on these shopping trips with them, the look on a cashier's face when you have thousands of dollars of candy is priceless.
- seiji 16y agoPeople seem to love buying office coffee and diapers from amazon: http://www.amazon.com/gp/bestsellers/grocery http://www.amazon.com/gp/bestsellers/grocery
- apowell 16y agoI work at home with my wife and six-month old daughter, and that list describes our Amazon buying habits very accurately.
- b3b0p 16y agoWow, that's kind of awesome. I looked at the first 2 pages and it's literally almost entirely diapers and coffee, sprinkled in between I noticed maple syrup, coconut oil, and wipes for all those diapers and at the end a box of Honey Bunches of Oats.
- jrockway 16y agoMy guess is that it has to do with the discount Amazon offers for Subscribe & Save and the fact that diaper and coffee needs are easy to predict. Those are two things that you don't want to run out of, so it's worth buying in bulk.
- younata 16y agowell. That stinks.
- younata 16y agook, lesson learned: Don't make humorous comments; you can't get modded +5 (funny) on here. Instead, you get downvoted.
- zzleeper 16y agoA question: Do they (diapers.com) make money? Free shipping, cheap diapers, expensive warehouse and logistics, etc. All this leaves very thin margins. I'm wondering how much money they have burned until today (the other articles implied it was a lot)
- jakarta 16y agoThe past articles written about the company have mentioned that the diapers are indeed low margin items, but they try to cross-sell products that have higher margins (products like baby oil or soap). Since the box to send the diapers is already huge, the incremental cost of shipping these adjacent products is quite low (usually they can just throw them in the diaper box). It's a good strategy.
- zzleeper 16y agoMore on this: http://techcrunch.com/2010/04/20/diapers-com-on-its-way-to-selling-half-a-billion-diapers-raises-20-million-debt-round/ http://techcrunch.com/2010/04/20/diapers-com-on-its-way-to-s... http://www.mentortechventures.com/MT-News.blog/2009/09/01/Diapers-com-CEO-featured-in-INC-500 http://www.mentortechventures.com/MT-News.blog/2009/09/01/Di... So apparently, Quidsi (the real name) is at break even*, has raised 80 million in equity since 2006 (plus the founders own injections), and this year will sell 270m while spending 30m on advertising. At first I thought that they may not have been worth the 500m, but I'm rethinking that now.
- revorad 16y agoNote to self: Do NOT read Techcrunch comments. Ever.
- tlack 16y agodidnt amazon also start their first facebook page-based store selling diapers? diapers must be their most interesting product according to some internal spreadsheet..
- steveplace 16y agoApparently AMZN squeezed their margins so they were forced to sell.
- steveplace 16y agoLooks like I'm being down voted for lack of citation, so here you go: http://www.businessinsider.com/amazon-diapers-price-war-2010-11 http://www.businessinsider.com/amazon-diapers-price-war-2010...
- antidaily 16y agoThat's about 3 billion diapers.
- brianbreslin 16y agoThe most fascinating things about their business to me are the robots that move the product shelves TO the human pickers & the algorithmic approach that allows them to eke out extra margins
- jmelloy 16y agodiapers.com is one of our competitors, and we're currently evaluating the same Kiva system they use in our distribution centers. The initial numbers look fantastic.
- citizenkeys 16y agooddly enough, i went to a "founders institute" workshop just last night and one of the primary examples involves... diapers. staple items like diapers are things people like to order without actually seeing. plus, those types of items are easy hooks to get people to buy complimentary items with bigger profit margins.
- chadp 16y agoDoes anyone know what % the founders held at the time of the sale? Sounds like they should have done OK, depending on what % they gave up for their $78MM VC.
- kloncks 16y agoSide question: Any one know the font used in the diapers.com logo?
- hyperbovine 16y agoLitera?
- mcdowall 16y agojust use whathtefont.com
- dr_ 16y agoAs an interesting side note, the COO Vinit Bharara's brother is the US Attorney for Manhattan (direct Obama appointee) Preet Bharara. In the news fairly often.
- dennyabraham 16y agoI've heard that diapers.com's warehouses are fully automated. If this isn't already how amazon's warehouses are set up, is this infrastructure (and the know-how to reproduce it) part of the reason behind the acquisition?
- cosmicray 16y agoFrom what I read, and from what I know personally, being able to take an arbitrary shopping cart of items, and select the most efficient box is a huge advantage. You can absolutely improve your margins by trimming your shipping costs to a minimum. Although the article doesn't mention it, I suspect UPS is doing most of their carriage. Anyone know for sure ?
- the_imp 16y agoYes. Their warehouses use a Kiva Systems setup, i.e. they have hundreds of little orange robots that run around and lift & carry shelves. Though an ad, this gives a rather good idea: http://www.youtube.com/watch?v=6zXOW6v0c8s http://www.youtube.com/watch?v=6zXOW6v0c8s