(Bloomberg)—Amazon.com Inc. is shutting down its Quidsi division, which it acquired for about $545 million in 2011, saying it has been unable to make the owner of Diapers.com and Soap.com websites profitable.
“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,” Amazon, No. 1 in the Internet Retailer 2016 Top 500 Guide, said in a statement. “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.”
More than 260 employees at Quidsi’s Jersey City, N.J., headquarters and customer service operation will lose their jobs in June, according to a notification sent to the New Jersey Department of Labor. Some of them will be able to apply for other Amazon jobs, according to the notice. Quidsi also has warehouses in Kansas and Nevada.
The closing of the unit is the latest chapter in the running feud between Amazon founder Jeff Bezos and his e-commerce nemesis Marc Lore, founder of Quidsi.
Lore duked it out with Amazon over e-commerce sites such as Diapers.com. A protracted price war and tight credit market during the U.S. recession pushed Lore to sell to Amazon, where he worked until 2013 as part of the deal.
Lore emerged in 2015 when his new e-commerce site, Jet.com, launched publicly with a plan to challenge Amazon yet again. He sold Jet.com to Wal-Mart Stores Inc. (No. 4 in the Top 500) for $3.3 billion last year and now runs e-commerce operations for the world’s biggest retailer and Amazon’s top competitor.
Amazon purchased the sites to eliminate a competitor and learn as much about the specialty categories as possible, and it no longer needs brands like Soap.com as stand-alone sites, said Allen Adamson, founder of Brand Simple Consulting in New York.
“They sucked out any knowledge that team had and now they’ll put it behind the Amazon brand and steamroll those categories,” Adamson said.