In its second-largest acquisition, Amazon buys the company for $970 million.
Diapers.com increased web sales 105% last year with bigger and better delivery.
With annual sales that increased 104.5% to $182 million in 2009, Diapers.com has a simple recipe for success: Deliver busy moms what they want, and in less time.
While many online retailers scaled backed their marketing, merchandising and inventories last year, Diapers.com, No. 85 in the Internet Retailer Top 500 Guide, was busy ramping up. In a bad economy, busy and time-starved young parents, especially working mothers, still had to order the basics of child care such as diapers, baby wipes, formula, clothes and items for the nursery. As the kids began to grow, parents also needed car seats and strollers.
To cater even more effectively to busy parents with young families and soon-to-be parents, Diapers.com expanded customer service, rolled out a speedier and broader next-day delivery program, and added more personalized web site features and functions. Diapers.com, which launched in 2005 and finished its first year in business with sales of just $2.5 million, also expanded its marketing relationship with two popular Internet destinations for young parents: BabyCenter.com, a content and community web site operated by Johnson & Johnson, and Our365.com, a new parent community and a digital provider of in-hospital newborn portraits. “We saw an opportunity to expand our market last year and we had the resources, so we moved ahead,” says Diapers.com CEO Marc Lore. “We didn’t see the reasoning in pulling back.”
The key to Diapers.com’s expansion even in rough financial times has been taking customer comments from phone calls, e-mail correspondence and product reviews and converting the feedback into marketing and technology programs that produced an effective return on investment. “We don’t have a secret ingredient for success; we just study what our customers tell us they want, which is to save them as much time as possible, and figure out a way to make that happen,” says Lore.
A big focus area for Diapers.com has been improving its e-commerce site with more personalized features and functions. In April, Diapers.com launched an online registry with a Ship it Later option for moms and dads who want to wait to receive their baby gifts. The registry also offers an online checklist showing expectant parents items the retailer deems must-haves and those that are merely nice-to-haves. The list, Diapers.com says, acts as a virtual registry assistant, helping soon-to-be-parents track their progress as they register.
This year Diapers.com also plans to roll out an improved and internally designed personalized product recommendation system, a faster shopping cart that follows shoppers from page to page, and better tools that give shoppers faster and more detailed access to information such as past ordering histories. “Any feature that’s going to give time back to a busy parent is what’s going to top our list of development priorities,” says Diapers.com director of e-commerce solutions Josh Himwich.
Diapers.com is getting help from investors to help make the leap from category leader to category killer, says Lore. In October, Quidsi Inc., the privately held parent company of Diapers.com, closed on $30 million in new financing from New Enterprise Associates Inc., Accel Partners, Bessemer Venture Partners and MentorTech Ventures. Diapers.com will use the funds to implement more sophisticated web site features and more than triple the number of products in its online inventory to about 60,000, says Lore.
With secure funding, an aggressive business development plan and what it says are several hundred thousand customers, sales are also expected to grow by at least 65% to around $300 million in 2010. “The web is all about being an execution business and we’re getting better at that all the time,” Lore says. “When other companies pulled back last year, we stepped on the pedal.”