Sources: Amazon execs told employees they expected Quidsi, including Diapers.com, to be profitable in 2017, raising speculation about real reasons for shutdown
Jason Del Rey / Recode : Tweets: @delrey . Thanks: @ravichandrans25 Tweets: Jason Del Rey / @delrey : Execs told employees the company would generate profits & free cash flow in 2017. Then Amazon blamed profitability issues when killing it. http://twitter.com/... Thanks: @ravichandrans25
Context & Ripple Effects
Four days after Amazon announced it would shutter the Quidsi division it bought for $545M in 2011 — citing an inability to make it profitable — Jason Del Rey reports execs had told employees the opposite internally: that Diapers.com and Soap.com would generate profits and free cash flow in 2017.
The discrepancy matters because it feeds a longer arc about why Quidsi died. Three years later, emails released by the House antitrust subcommittee showed Amazon had planned to weaken Diapers.com before acquiring its parent in 2010, turning what looked like a failed integration into evidence of a deliberate playbook.
First-order effects
- Quidsi employees face a division shutdown they were told was turning profitable, undercutting the official rationale and raising questions about whether the closure decision was made for reasons never disclosed to staff.
- Diapers.com and Soap.com customers lose their brands outright; the sites' traffic and fulfillment fold into Amazon's own baby- and household-goods categories.
Second-order effects
- Independent vertical retailers competing with Amazon — the category Zulily occupied before it wound down and accused Amazon in a December lawsuit of stifling its business — face a rival whose acquisitions can end in closure rather than competition, narrowing exit options for founders selling to Amazon.
- If internal projections contradicted the public profitability claim, investors and regulators gain grounds to question how Amazon attributes losses inside acquired units, complicating future acquisition justifications.
Third-order effects
- The pattern — acquire a category leader, absorb its demand, then retire the brand — became central evidence in congressional antitrust scrutiny of Amazon, pushing regulators toward examining post-acquisition conduct rather than just deal-time market share.
- For e-commerce founders, the Quidsi arc reframes selling to Amazon from a liquidity event into a strategic risk, tilting exits toward staying independent or selling to non-competing buyers if the pattern holds.
The trend: Amazon's acquired-brand shutdowns are shifting from operational footnotes into core antitrust evidence, with internal communications increasingly used to test whether stated business rationales match actual strategy.