Rumor of this buyout has been zipping over the web all weekend, but Amazon has finally confirmed: It’s acquired Quidsi, the parent company of online retail sites Diapers.com, Soap.com, and BeautyBar.com. The deal is remarkably similar to the one it did last year with Zappos, purveyors of footwear to the Internet-minded.
Jeff Bezos’s statement was typically quirky. “I’m not sure which is more unpleasant–changing diapers, paying too much for them, or running out of them. This acquisition brings together two companies who are committed to providing great prices and fast delivery to parents, making one of the chores of being a parent a little easier and less expensive.”
Fortune’s Dan Primack, who first broke the story, reckons the real value lies in Quidsi’s know-how in shipping and storing. The firm’s co-founder, Chairman and CEO, Mark Lore, said in an interview last year that the way his firm did business was strictly alogrithmic.
So before we launched we built proprietary software from scratch. We built software with computational algorithms to determine what the optimal number of boxes to have in the warehouse is and what the sizes of those boxes should be. Should we stock five different kinds of boxes to ship product in? Twenty kinds? Fifty kinds? And what size should those boxes be? Right now, it’s 23 box sizes, given what we sell, in order to minimize the cost of dunnage [the stuffing], the cost of corrugated boxes, and the cost of shipping. We rerun the simulation every quarter. Using the right box probably adds close to 1 margin point.
The deal, which will see Amazon acquire Quidisi’s outstanding shares, is worth approximately $500 million in cash, and takes on around $45 million in debt. It is expected to be tied up by next month.