Amazon is shutting down a division it bought for $545 million, escalating a feud between Jeff Bezos and his Walmart rival (AMZN, WMT)
Jet
Bloomberg reports that Amazon is shutting down its subsidiary Quidsi, the parent company of Diapers.com, Wag.com, Soap.com, and three other shopping sites. Quidsi has 1,100 total employees.
Amazon purchased Quidsi for $545 million in 2010. In a statement, Amazon said it shut the subsidiary down simply because it couldn't get it to profitability in the intervening years.
The products offered by Quidsi will be stocked on Amazon.com, and Quidsi's programmers will work on the AmazonFresh grocery service. Amazon will undergo 263 layoffs at Quidsi as part of this restructuring, reports Reuters.
The shutdown also carries some weight for Amazon CEO Jeff Bezos and his longtime rival Marc Lore, who founded Quidsi and is currently the CEO of US commerce for Walmart.
Quidsi was acquired after a vicious price war between Lore's company and Bezos' Amazon. Eventually, Quidsi was unable to raise more investment capital, and Lore sold the company to Amazon. Lore and his cofounder, Vinit Bharara, made a lot of money in the deal but left Amazon in 2013, not long after their contractual mandate to work at the company after the acquisition ended.
Steve Jurvetson / Wikimedia Commons
Lore went on to found Jet.com, a shopping site with the explicit goal of outpacing Amazon in terms of innovation. Jet raised $225 million in venture-capital cash but was said to be running out of money not long before Walmart swooped in to buy it for $3 billion in August.
Now Lore is in charge of helping the titanic Walmart better stave off Amazon's relentless march on retail and commerce, putting him at loggerheads with Bezos yet again. And while Amazon apparently closed Quidsi for good business reasons, it still has to be a splinter in Lore's eye that Bezos is shutting down the company he built.
Here's Amazon's full statement on the Quidsi shutdown:
"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. 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."
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