
Amazon to buy Diapers.com for $540 million - themichael
http://finance.fortune.cnn.com/2010/11/06/amazon-to-buy-diapers-com-for-540-million/
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prs
A bit of a background on diapers.com - referred to in the article -
Recommended Read.

[http://www.businessweek.com/print/magazine/content/10_42/b41...](http://www.businessweek.com/print/magazine/content/10_42/b4199062749187.htm)

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hristov
You 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.

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vaksel
they sold another business prior to this, so it's probably the latter

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timmins
When 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.

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djb_hackernews
hmm, 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.

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seiji
People seem to love buying office coffee and diapers from amazon:
<http://www.amazon.com/gp/bestsellers/grocery>

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apowell
I work at home with my wife and six-month old daughter, and that list
describes our Amazon buying habits very accurately.

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citricsquid
Ah, 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.

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user24
yeah. I actually flagged the article because that headline is far too
misleading (not themichael's fault).

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tvon
I'm surprised, diapers.com should be pretty well known to anyone interested in
business or entrepreneurship.

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user24
Should 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.

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sparky
If that's their company name ( <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.

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mbrubeck
And yet the headline didn't say "Amazon.com to buy Diapers.com"...

("Amazon.com, Inc." is the name of the company.)

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martinkallstrom
"Amazon buys Diapers for $540 million" would also have been a set up for
misunderstandings in it's own way.

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dennyabraham
I'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?

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cosmicray
From 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 ?

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jakarta
I'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.

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ceejayoz
I 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-o...](http://www.bloomberg.com/news/2010-10-07/diapers-com-takes-on-
amazon-in-huggies-delivery-time-smackdown.html)

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kingkilr
Two 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.

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antidaily
That's about 3 billion diapers.

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privacyguru
Great 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/b41990627...](http://www.businessweek.com/magazine/content/10_42/b4199062749187.htm)

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zzleeper
A 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)

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zzleeper
More on this: [http://techcrunch.com/2010/04/20/diapers-com-on-its-way-
to-s...](http://techcrunch.com/2010/04/20/diapers-com-on-its-way-to-selling-
half-a-billion-diapers-raises-20-million-debt-round/)

[http://www.mentortechventures.com/MT-
News.blog/2009/09/01/Di...](http://www.mentortechventures.com/MT-
News.blog/2009/09/01/Diapers-com-CEO-featured-in-INC-500)

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.

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revorad
Note to self: Do NOT read Techcrunch comments. Ever.

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brianbreslin
The 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

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jmelloy
diapers.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.

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dr_
As 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.

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chadp
Does 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.

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citizenkeys
oddly 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.

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steveplace
Apparently AMZN squeezed their margins so they were forced to sell.

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steveplace
Looks like I'm being down voted for lack of citation, so here you go:
[http://www.businessinsider.com/amazon-diapers-price-
war-2010...](http://www.businessinsider.com/amazon-diapers-price-war-2010-11)

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kloncks
Side question: Any one know the font used in the diapers.com logo?

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hyperbovine
Litera?

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tlack
didnt amazon also start their first facebook page-based store selling diapers?
diapers must be their most interesting product according to some internal
spreadsheet..

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younata
well.

That stinks.

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younata
ok, lesson learned:

Don't make humorous comments; you can't get modded +5 (funny) on here.
Instead, you get downvoted.

