Amazon on Wednesday confirmed that it is shutting down its Quidsi unit, which runs websites Diapers.com and Soap.com, due to a persistent lack of profitability.
The online retailer plans to cut 263 jobs at Quidsi this summer as part of a business restructuring, it said in a notice filed with New Jersey on Wednesday.
"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," an Amazon spokesperson said in a statement.
Quidsi Photo
The move underscores a shift in Amazon's focus to groceries and other areas since it closed its $545 million cash acquisition of the startup, its former rival, in late 2010. Fresh food represents a large and fledgling market for online retailers, in contrast to goods such diapers that have been the subject of price wars in recent years.
"Quidsi has great brand expertise and they will continue to offer their selection on Amazon.com; the software development team will focus on building technology for AmazonFresh." the spokesperson said.
AmazonFresh lets people shop online for grocery store goods, including pet, baby and beauty supplies.
An AmazonFresh Pickup storefront is pictured on March 28, 2017 in Seattle, Washington. / AFP Photo
"Consumables like soap and pet food are often priced very competitively by retailers in order to drive price perception and ultimately drive online and in-store traffic," said Guru Hariharan, chief executive of retail technology company Boomerang Commerce. "While unfortunate, the shutting down of the Quidsi sites isn't completely surprising."
The market appeared to welcome Amazon's attention to losses at the subsidiary, unusual for a company that has prioritized long-term investments over profit. Amazon's stock briefly hit a record high of $876.44 before closing at $874.32. Its chief executive and largest shareholder, Jeff Bezos, gained nearly $1.5 billion from the 2.1 percent stock rise.
Quidsi co-founder Marc Lore went on to create another online commerce company, Jet.com, which was bought last year by Walmart for about $3 billion in a move aimed at competing with Amazon.
(Source: AFP, Reuters)
