It would seem that ecommerce stores learned a valuable lesson in the past few days: If Amazon says they want to buy you, you might as well sell.
Diapers.com launched in 2005 and had worked its way up to a $100 million in annual sales and a $300 million dollar valuation. Pundits were beginning to say that perhaps Amazon should be concerned, and BusinessWeek even ran a cover story this year entitled “What Amazon fears most: Diapers”. Well, it seems that the baby-centric business was indeed on Amazon’s radar, and when the company passed on selling out to them, the leading online retailer didn’t take too kindly to that.
Late last week many blogs were reporting on how Amazon had dropped the prices on all of the products they carried that competed with Diapers.com to well below the latter’s prices. The general suspicion was that this was indeed Amazon’s response to the company refusing to sell out to them, and it would would appear those suspicions were correct.
Over the weekend it was announced by Fortune that Diapers.com had agreed to sell to Amazon for $540 million, well over the latest market valuation of $300 million. It has also now been rumored that Walmart may have also been courting the baby goods site, but that is still unconfirmed.
Apparently the lesson we’re starting to learn about Amazon is that if they decide they want to acquire your company, they’re going to do it one way or another. When Amazon purchased Zappos.com last year for $1.1 billion, the management of that company admitted to feeling pressured in to the sale. With Diapers it was just so undercut there was really no way they were going to be able to compete with the monolithic company that wanted to purchase it.
While it does sound like Diapers got a fair price, you have to wonder about Amazon’s reputation. Are people going to start to view it as a bully of the online sales world? Are companies going to cower in fear any time Amazon calls them now saying they want to talk as opposed to rejoicing at the thought of being acquired? Only time well tell.
What say you? Is Amazon turning into a bully?