Full disclosure – ChannelAdvisor and Quidsi share an investor in NEA.
Reports that Amazon will announce a $540m acquisition of Diapers.com tomorrow (parent company is called Quidsi and also operates soap.com) are floating around the internet. This would mark the third major M+A on top of Zappos and Woot.
It’s an interesting turn of events when you look at the sequence of milestones:
- October 09 – Quidsi raises $30m, revenues closing in on $100m, growing > 100%
- September 10 – Amazon announces Amazon Mom.
- October-November 10- Amazon starts price war with Diapers.com – consistently 10% below, leverages Mom.
- Late 2010 – Diapers.com growth rumored to slow dramatically due to intense Amazon compeititon.
- November 8 – Amazon announces M+A of Diapers.com
What’s the Poop on this transaction?
It seems there are two likely scenarios here:
- Amazon wanted into the space, started competing and realised it was harder than they thought – thus they took the M+A path.
- Amazon wanted to acquire Diapers, Diapers said no, Amazon hammered them with Mom and a price war – Diapers capitulated.
The Diaper’s biz doesn’t stink – Buying into Growth
In either case, this is a huge category with annual sales over $10b and one that Amazon clearly wants to have a leadership position in. By acquiring Diapers.com, they are taking a big step towards locking down this category.
Diapers is said to have hit $180m in 09 and on their way to $300m in 2010 – > 60% growth and targeting 1.2b in 2012.
Put a pin in it.
What do you think – is this is a brilliant move by Amazon? Did they force diapers.com into a corner? Will this be a successful addition or a ripey dipey?
SeekingAlpha Disclosure – I am long Amazon and Google. eBay is an investor in ChannelAdvisor.