Who’s selling the most diapers on the Internet?

It’s not Amazon. It’s the site diapers.com and a remarkable story. You can read how they did this in and article “What Amazon Fears Most: Diapers” in Business Week magazine.

Here’s how I interpreted the article. Quidsi basically took Amazon’s strategy and used it. What makes customers love Quidsi is their selection and robots. Did they say robots? What makes investors love Quidsi? Cash flow.

Cheaper than Walmart (b/c of larger bulk), more convenient and better selection than Costco (and Sam’s Club) and more specialized than Amazon.

Quidsi has diapers as their loss leader and they’re hoping you buy something else. They also own the site soap.com and it’s rockin’ straight out of the gate.

I don’t know if founders Mark Lore and Vinit Bharara are business savants, but they do have guts. How about using their credit cards for 30-day terms, on products they bought at Costco and BJ’s warehouse clubs? Not to mention, that they were also doing $2 million in revenue and losing money. Talk about sticking to your philosophy. If they mark up everything they sold a quarter, they probably would have made $100k, but not so fast. Maybe they would have gotten half the sales too?

Amazon isn’t exactly shaking in their boots. “Amazon introduced Amazon Mom, a program offering a free three-month trial of Amazon Prime for mothers ordering diapers and other baby items.” You can never discount the free shipping that Diapers.com offers. People love free shipping. You wonder how they can turn a profit. They probably do not; but neither did Amazon for the longest time. In fact, Amazon’s first profitable quarter was the 4th quarter of 2001, which is about six years after Jeff Bezos founded Amazon.

So, does Quidsi get bought by Amazon, like Zappos? The real question is, do they care?

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