The Bloomberg BusinessWeek cover story this week (“What Amazon Fears Most: Diapers,” October 7, 2010) is a long article on Diapers.com. Our kids are older — so we are not in the target market and we were unaware of the success this company is having. The story is interesting and relays the low-cost start-up strategy. The founders spent their seed money on building a customer friendly website. When they launched they were buying diapers from the local club stores and storing them in a friend’s garage. They have since moved into three state-of-the-art warehouses.
The article describes Diapers.com’s retail and pricing strategy — let’s not make money on the diapers but on the other products shoppers add to the cart with the diapers. The article also has some excellent examples of logistics and distribution.
UPDATE, November 13: Amazon buys Diapers.com.