Amazon closes down Quidsi due to unprofitability

In an announcement on Wednesday, e-commerce giant Amazon.com stated that will shut down one of its businesses, Quidsi Inc. Quidsi operates several of Amazon’s subsidiary websites like Diaper.com and Soaps.com, which mainly offer baby and household products.

According to Amazon, it has struggled since it first acquired Quidsi in 2011 for $545 million to generate profitable earnings but has failed to do so. Due to this, the e-commerce giant has decided to shut down its operations of the New Jersey-based company, resulting with a total of 263 laid-off employees.

Amazon has already sent an official notification to the New Jersey Department of Labor, to inform of the layoffs. Included as well on the notice, Amazon stated that several of the employees from Quidsi could still apply for other Amazon jobs.

Quidsi was Amazon’s fourth biggest acquisition yet, as a result of Amazon’s goal to eliminate one of its competitors back then. In a long and complicated process, Amazon has struggled to purchase Quidsi back in 2011 in order to expand the company’s reach in New Jersey area, while also eliminating Quidsi as one of its rivals, and adding it to their businesses instead.

On the note to the Department of Labor, Amazon stated “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.”

Although the Quidsi subsidiary will be permanently shut down, some of its products will still be available for purchasing at Amazon’s website.

Amazon’s decision to close down Quidsi comes at a time where the e-commerce giant plans to expand its offering in grocery division. At present, the company is improving its position in the $800 billion grocery market, including new experimental convenience stores and grocery pickup kiosks.

In addition to that, many speculate that the main driver behind Amazon CEO Jeff Bezos's decision to acquire, then shut down Quidsi was to totally eliminate the company, headed by founder Marc Lore then, as a rival in the industry. The two are known to have had long fued in the e-commerce and retail industry. However, Lore was forced to sell Quidsi to Amazon back in 2011 due to the recession.

However, after Lore left Amazon in 2013, he founded a new company named Jet.com, made it into a new big e-commerce company, sold it to Wal-Mart, and is now Amazon’s main competition in the market. Lore is currently the CEO of Wal-Mart’s Jet.com e-commerce division.

Meanwhile, Amazon’s stock (NASDAQ: AMZN) recently reached its all-time high on Wednesday trading session, closing 2.14% or $18.32 higher at $874.32 per share. The stock experienced a sharp surge during the previous session as analysts saw that the company could possibly one of the first companies to reach a total market value of $1 trillion.

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