Amazon plans layoffs at Quidsi unit after losses

Wed Mar 29, 2017 8:24pm EDT
 
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By Jeffrey Dastin

(Reuters) - Amazon.com Inc (AMZN.O: Quote) plans to cut 263 jobs at its money-losing parenting products unit Quidsi this summer as part of a business restructuring, it said in a notice filed with New Jersey on Wednesday.

The New Jersey-based subsidiary operates Diapers.com, Soap.com and other websites.

"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," an Amazon spokeswoman said in a statement.

Quidsi's software development team will focus on building technology for the grocery delivery service AmazonFresh, the statement said.

The move underscores a shift in Amazon's focus to groceries and other areas since it closed its $500 million cash acquisition of Quidsi in 2011. Fresh food represents a large and fledgling market for online retailers, in contrast to goods such diapers that have been the subject of price wars in recent years.

"Consumables like soap and pet food are often priced very competitively by retailers in order to drive price perception and ultimately drive online and in-store traffic," said Guru Hariharan, chief executive of retail technology company Boomerang Commerce. "While unfortunate, the shutting down of the Quidsi sites isn't completely surprising."

The market appeared to welcome Amazon's attention to losses at the subsidiary, unusual for a company that has prioritized long-term investments over profit. Amazon's stock briefly hit a record high of $876.44 before closing at $874.32. Its chief executive and largest shareholder, Jeff Bezos, gained nearly $1.5 billion from the 2.1 percent stock rise.

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FILE PHOTO: An Amazon.com Inc driver stands next to an Amazon delivery truck in Los Angeles, California, U.S., May 21, 2016. REUTERS/Lucy Nicholson/File Photo