Amazon Employees Confused After Quidsi Shutdown
Last week, Amazon.com announced that it's shutting down its Quidsi subsidiary because it isn’t able to turn a profit. However, some employees believe there are alternative reasons for Quidsi's closure. In a meeting in late 2016, Amazon and Quidsi execs told employees they were confident that Quidsi would turn a profit and generate significant cash flow in 2017. Therefore, employees are left speculating about what the truth is. Sources in attendance of the late 2016 meeting told Recode of two theories:
- Amazon doesn’t want to admit that a business it paid $545 million to acquire in 2011 was never a strategic fit.
- Others claim it could be some game playing by Amazon’s CEO Jeff Bezos to send a message to Wall Street that Quidsi co-founder Marc Lore isn’t capable of building a successful business. Lore currently runs Wal-Mart’s e-commerce business after the big-box retailer acquired Jet.com — the company Lore founded after leaving Amazon.
Total Retail’s Take: Amazon has declined comment on the above theories, sticking to its original statement when the Quidsi announcement was first made last week:
"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. Quidsi has great brand expertise and they will continue to offer selection on Amazon.com; the software development team will focus on building technology for AmazonFresh."
Sources say that Quidsi has never actually generated net income for a full fiscal year since it was acquired by Amazon in 2011. However, the subsidiary strung together a few profitable months in 2015 and 2016. Also, Quidsi was able to shave tens of millions of dollars in losses off of the business over the past few years. Put all of this together and it's easy to see why employees are questioning Amazon’s decision to shutter the business unit.