Amazon Kills Competitor’s Baby In Grudge Match After Paying $545M For It

Quidsi is one of Amazon’s most expensive acquisitions at $545 million and the retail giant just announced that it is killing it off. Although failed ventures happen in the business world all the time, what the media find most interesting about this development is its connection with the recent war between the founder of Quidsi and Amazon. Is it a good business move or just retaliation?

As Bloomberg points out, acquiring Quidsi in 2011 was a way for Amazon to eliminate a promising competitor while also gaining additional clients. Once the deal was made, Quidsi’s CEO at the time, Marc Lore was brought on to work in Amazon.

Based on his own words, it seems that Lore did not like the time he spent working for the retail juggernaut, which is why he left to form yet another company called Jet.com. It was immediately snatched up by Walmart for $3.3 billion in order to make the startup its own e-commerce arm. This effectively made Jet.com Amazon’s direct rival, with the founder of Quidsi as the head.

By killing Lore’s baby, Amazon is also eliminating 263 people from the payroll. Although some of these employees might be getting a job at the online merchant site, not all of them are guaranteed to land on their feet.

Amazon also blamed the decision to kill off Quidsi, which counts Diaper.com, Soap.com, and Wag.com as subsidiaries, on not being profitable enough. In a statement to Recode, a spokesperson from the company noted how none of their efforts to make money off of the unit panned out.

“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,” the spokesperson said. “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.”

This may well be the case and Amazon could be getting rid of the expensive acquisition simply because it’s not making money. However, with Lore recently making brash statements threatening to overtake Amazon as the biggest retail entity in the e-commerce industry, some are interpreting Amazon’s decision as a power move.