Amazon has plans for a summer purge of its business. The retail giant wants to close some of its most unprofitable projects. Once this is achieved, the company wants to focus entirely on its portfolio of businesses that bring value to customers as well as the entire organization. Its main goal is to become the quickest solution for clients to all kinds of shopping lists. Thus, Amazon announced the shutdown of its Quidsi division.
Amazon Tried for Seven Years to Transform the Quidsi Division
The Quidsi division is actually a parent company under which protection stands a series of businesses. The Amazon subsidiary has a wide range of brands such as Diapers.com for baby care, Soap.com for beauty and household essentials, Wag.com intended for pets, BeautyBar.com, Yoyo.com, and Casa.com.
Amazon acquired the Quidsi division in 2010 for a total of $545 million from entrepreneurs Marc Lore and Vinit Bharara. Since then, the retail giant tried to improve the business format and turn it into a profitable success. However, a spokeswoman for Amazon stated that this goal proved to be impossible to reach.
“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.”
As a consequence, Amazon is going to eliminate 263 positions in an effort to implement a necessary business restructuring. However, the company will retain the Quidsi team from the software development department. They will continue to work as developers for the AmazonFresh service. This is the company’s online solution for customers to do their grocery shopping from the comfort of their homes.
Pet and Baby Care Industries Face Struggles Because of Low Price Tags
The reason behind the elimination of the Quidsi division is a long-lasting struggle in industries for baby car and pets. Retailers have been engaging in a war to obtain the most competitive prices for their products. In exchange for a lower price tag, they are looking for increased traffic for their stores and online platforms. This tense situation urged Amazon to take a decision sooner rather than later.
The market appreciated the news. Amazon is known for its attention to long-term investments to the detriment of short-term earnings. Despite this professional direction, the retail company saw no more reasons to remain attached to this unprofitable subsidiary. In light of this decision, the shares in Amazon rose to a record high of $876.44 only to close at $874.32. This was enough time for the largest shareholder, Jeff Bezos, to earn almost $1.5 billion.
Image source: 1