Amazon.com to shut unprofitable Quidsi division

Amazon.com Inc said yesterday that it was shutting down Quidsi, the company behind Diapers.com that it bought for over $500 million, as it was unprofitable.

Amazon acquired Quidsi, which also ran Soap.com, in late 2010 after it gained prominence shipping diapers and other household staples mostly for free, a segment in which Amazon was also fiercely competing.

Quidsi's goods would be sold on Amazon.com, an Amazon spokeswoman said, while its software development team would be moved to AmazonFresh, the company's grocery division.

Amazon would lay off 263 employees, some of whom would be considered for other jobs within the company, according to a document filed with the New Jersey Department of Labor and Workforce Development.

"It probably makes sense from a cost and logistical perspective to integrate the operations, including the brands," said Colin Sebastian, an analyst with Robert W Baird & Co, Reuters reported.

Except of Diapers.com, the sites had not been generating enough traffic, and much of it was referrals back and forth from Amazon.com anyway, he added. Also, many of Quidsi's product categories were ones Amazon planned to offer through its Fresh grocery business.

Confirming the news of Quidsi's shutdown, Amazon stated in a release that the business was yet unable to achieve profitability.

''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,'' an Amazon 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.''

Amazon had continued investing in Quidsi's business over the years following the acquisition and had also launched new brands like green grocer VineMarket.com, and had also brought the individual sites to mobile devices, including iPad.

Amazon did not say when the Quidsi sites would be shut down.