Businessweek.com just published a story on how a small company with a big idea and a great domain beat Amazon.com at its own game.
The Article entitled “What Amazon Fears Most: Diapers” is a very interesting case study in what a category killer domain can do for a business.
The article concentrates on the five year old company Quidsi, the parent company of Diapers.com.
The company by years end will ship its 500 millionth diaper.
The company did $180 million in revenue in 2009 and expects to top $300 million this year.
The company started out in 2005 as 1800diapers.com but acquired the domain name Diapers.com in 2007 for an undisclosed amount. (this is another one of those domain sales we never heard of)
The company has now launched its second line of products under another killer domain, Soap.com.
According to the article Soap.com which just launched in July 2010, “is doing $1.8 million of revenue in a month, in its first month,” “That’s $20 million a year.”
The secret according to the article of these category killers:
“”An intense focus on a category enables efficiencies that even Amazon would have trouble replicating,” says Rohan. “You can optimize your business. I think specialization with scale is going to be the central theme for e-commerce for this decade.”
“Specialization also works because you can design a website targeted to a particular audience. Start at the home page, and you’re almost done shopping”
Something to think about while your parking your category killer domain.
i like
Great post! I think this is one of the best examples illustrating the power of a category defining generic combined with the buildout to match. So many have a hard time articulating or understanding these things and this example is perfect.
“The partners don’t make money on diapers, and never planned to. Diapers are the draw that brings in loyal customers who order over and over. The money comes when a shopper throws in one of the other 25,000 SKUs, or Stock Keeping Units, that Diapers.com lists on its site—higher-margin items like brand-name baby shampoo, wipes, and formula.”
Interesting that they don’t actually make any money selling diapers but use the domain strategically to pull in the customers.
That was a good read, thanks
Kicking the crap out of Amazon.com? Amazon is not a diaper store so the comparison is flawed but if you want to paint using a broad stroked brush how can a company with revenues in the 100s of millions be kicking the crap out of a company with annual revenues in the 100s of BILLIONS. Ya think Jeff Bezos cares, feels threatened by or has even heard of these guys. Doubt it.
The power of non BS domain—
Think of how many people would love to have a business just having one nice domain name.
“You can optimize your business. I think specialization with scale is going to be the central theme for e-commerce for this decade.”
Amen!
Love stories like this. Keep an eye on our Traveler.com. We just closed a huge development deal for it and, hopefully, it will replicate the same success as these two.
@ Gazzip, thanx for sharing that! Interesting . . . @ David Castello, look forward to Travelor .com It’s great David Clements’ Cheesecake .com . . . @ Greatpost said it well: “power of a category defining generic combined with the buildout” – that is what Epik seems to be doing in an understated way, launching my Cheese-Board .com, which offers bigger selection than Amazon!
great story…. maybe will motivate some further development online…
It’s possible to kick the s**t out of the big boys.
After spending millions in the last few years, eBay declared a defeat and pulled out Poland
losing to a local company Allegro.pl
Great story Mike.
David can still slay Goliath … I believe we will see more of this.
Great article Mike.
Look forward to big developments with Traveler.com David – signed up today for e-mail notices.
I found this reference to Webvan’s failed bid to build an online grocery store quite funny: “Plastic buckets were getting routed all over, and it could take hours to fill one. We would put one tote into the conveyor system and it might pop out two and a half hours later with one tube of toothpaste.”
500 Million diapers sold soon. At the rate they are selling, by the year 2015, the whole planet will be covered in used diapers 3 times over.
Haha.
Great read. This just sparked a great business idea too.
They’ve sold 500 MILLION diapers in only 5 years?
That’s 8.33 MILLION PER MONTH
Complete BS. They couldn’t give away for FREE 500 M in that time.
I don’t believe it.
Obviously using the marketing tactic of say it enough times & the idiots will believe it. Some of you should exercise some common sense..
The math doesn’t add up
Assume for FY 2010:
Average Revs pa = $240 M
Average price of diaper packs = $40
# of diaper packs sold pa (500M/5 yr) = 100 M
Complete BS…500M diapers sold..
(still, 6 Million sold pa is still good)
Don’t forget they say 500M diapers, not packs. What’s the average number of diapers in a pack over there in the US?
Along those lines…
Mike: Has has owning the domain Cloud.com impacted your business?
Peder: It has had a significant impact on the growth of the business as we came out of stealth mode. For one, having a top level domain brings instant traffic, awareness and, in many cases, credibility in a market place.
http://sullysblog.com/Cloud-Peder-Ulander
@Fizz……..adult or infant?
LOL……Frank Schilling owns wwwdiapers.com .
Our book publishing company just bought Fiction.com. Reading this story was inspiring.
UPDATE
Looks like Amazon is buying this company for $540 million
http://finance.fortune.cnn.com/2010/11/06/amazon-to-buy-diapers-com-for-540-million/