Amazon has launched a price war against Diapers.com that may have Quidsi, Diapers’ parent company, looking for an exit.Diapers.com has built a huge business — more than $100 million in revenue and recently valued at $300 million — right in Amazon’s backyard, offering free delivery of diapers and other products to parents.
A source familiar with the matter tells us that Amazon has approached the company about an acquisition several times in the past. But Quidsi has refused to sell.
And now Amazon appears to be trying to kill Diapers.com by selling its core product–diapers–at a huge discount.
One source in the industry hears that this price war has clobbered Diapers.com’s growth and forced the company into sales talks (perhaps with Amazon). Diapers.com declined to comment.
A quick price check illustrates that Amazon has been aggressively discounting diapers and related products. It also recently introduced Amazon mum, which offers further discounts, cash back, and free shipping.
Diapers.com has had to counter with price cuts and a cash-back program of its own, but Amazon is still undercutting the smaller company:
Amazon, for example, is selling a case of Pampers for $39. Diapers is selling the same case for $45.
The two companies are also locked in an advertising battle on Google’s AdWords. When we searched for ‘diapers’, Diapers.com had the top ad, and Amazon mum was in the second slot. But a search for ‘Diapers.com’ returned an Amazon mum above Diapers.com itself.Our industry source has heard that Amazon’s push has destroyed Quidsi’s growth. As a result, this source has also heard, Quidsi is looking to throw in the towel and sell, either to Amazon or another larger company.
Quidsi’s founders have always said that they weren’t looking for an exit, and that they thought the company could be huge on its own. But Amazon might be too big for an online retailer to fight.
Quidsi declined to speak with us to discuss this story.
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