Ok, further proof that it’s looking like 1999 all over again. A huge financial meltdown is just around the corner, and front line venture capitalists are spending money on ecommerce sites. Except this time around it isn’t pet sites. This time, it’s diapers.
Diapers.com, was founded in 2005 by two new dads and has raised two rounds of capital, including a $7 million round led by Bessemer Venture Partners in 2007. The original investor group included Nicholas Negroponte of One Laptop Per Child fame. We’ve got word from a source that the company, based on strong revenue growth, has raised a new and much larger round led by Accel Partners. Yes, the same Accel Partners that invested in Facebook.
Perhaps there’s big money in diapers, but competing with Amazon, BabiesRUs and Drugstore.com, all of which sell diapers, could be a problem in the long run. And the Wall Street Journal noted the site as having the cheapest prices on both Pampers and Seventh Generation brands of diapers, so their margins must be razor thin. But I guess that even if you lose a little on every transaction, you can make it up with volume.
Diapers.com also has the mandatory Green Baby section featuring diapers that are “eco-friendly, natural and organic.” Who knows if they’re better for the environment, but the margins are certainly healthier.
When I helped run a discount store in Silicon Valley one of the best things we did was buy a semi-truck of diapers. Why? People who buy diapers also buy lots of camera equipment and film, etc. But, this is a horrible idea for a business. Why? Because ToysRUs treats diapers as lost leaders and sells them for near cost. If they make it I’ll be highly shocked.
Chances are Scoble failed. It’s a “loss leader” – not a “lost leader”. Goodness. Learn business please. Until then, be quiet. Oh wait, learn English too. You can’t be “highly shocked”. That’s not even idiomatically correct. You can be “very shocked”.
Stick to journalism.
Let’s Dance
Do the Diaper Dance
Dance.
Do the Diaper Dance
You tape it to the left
Tape it to the right
So they don’t fall down
Just Pull them up tight!
http://www.totl...Diaper-Dance/0/
I’m sure the government will bail them out if they get into trouble. Having the nation’s diaper supply jeopardized is just one of those things that is too scary to contemplate failing!
It’s relatively hard to imagine Nancy Pelosi, Joe Biden, or John Kerry having first hand experience changing a diaper, but I imagine they would respond appropriately if constituents began mailing diapers to their office and dirties ran 10:1 ahead of cleans…
As a Dad of 2, I really don’t see the problem with finding diapers. Costco sells in bulk at a great price.
lol, good point. I know eco is a very big thing now and companies are jumping onto it. I think it is ok as long as the company’s main intentions are to really help, and not focusing solely on monetization.
One more thing: “1999 all over again” – i think you have your years wrong. More like 2002, with Accel in denial thinking it is still 1999.
Its good to see sites still pushing forward. If everyone were to freeze up because they are scared of the economy, we would hit the bottom harder and faster. In the end American entrepreneurship will help mitigate the downward slide.
“Order by 6 PM and receive it by October 08″? Dude, you got to be kidding? Ask around and find out how many parents needed to make a hike to Walgreens at midnight and you will see that anytime from anywhere is far more important than having Diapers.com as a shortcut in your browser.
Seems kind of obvious to me, but if you ordered your diapers ahead of time you wouldn’t be making those late night runs in the first place.
How do they stand a chance against Babies R Us, Walmart and Amazon?
[insert here clever pun about dirty diapers]
The diapers must be a loss leader strategy to lure people in. I still don’t see it working. It would be interesting to see their sales numbers. The Accel guys must see something in it.
Maybe, maybe, with a very small SKU range, huge volumes that can fill a superior “diaper distribution system”
. Big return on investment? Not sure.
great criticism DanceJam, i mean Edgio, i mean seesmic …
Maybe they should sell beer as well…
http://www.ther...5/beer_diapers/
A non-techie comment, but relevant nonetheless…
If you want a truly eco-friendly diaper, it’s called a pot. I have a 6 week old baby girl and well over 50% of her wee/poo is done in a pot! It’s easy and surprisingly fun. There is a book called “Diaper Free” which inspired us. She actually urinates/poos on demand and doesn’t sit for hours in her own faeces. Better for her, better for the environment
i completely misread that the first time, I thought you said “pot” not “a pot”
I was about ready to dial child services.. (just kidding)
A close friend just got back from China. She said that parents don’t diaper their babies, instead they pull down their pants in public and hold them over bushes to do their business. It’s normal apparently.
Probably better for the environment but still kinda gross.
You missed a fundamental part of the equity story:
We are at the beginning of a baby boom. The birth rate numbers from 2006 aare just showing that.
Generation Y parents are entering their prime child bearing years and it is much larger generation than Gen X. Gen Y is 75 million strong, while Gen X was very think at 50million.
And, interviews with Gen Yers show that they want to have more babies and younger in their lives. Even if this doesn’t happen, the sheer number of Gen Yers having babies is enough to provides a strong tailwind.
“But I guess that even if you lose a little on every transaction, you can make it up with volume.”
Huh???
-0.01 * n is still negative, Mike!
As a father of 3, you are surprised in what you find value in.
Is this what the vc tech sector has to do these days to flip a buck?
just another sign we are in another bubble?
Could you imagine a “diaper site” called Crapster.com, FaceCrack.com or TechDump.com?
At least the company has a great generic domain name. im sure that domain alone is worth north of 300,000.00. When all else fails they can sell it to jonson and jonson who own baby.com
TotLocator.com
Yup. Bet that is the exit strat…
Its funny how techcrunch bites at company with actual products and real revenues, I see 100 – 200 vaporware sorry i mean web 2.0 companies failing before they do.
LMAO
All of you critics who don’t have kids: please try schlepping two or three bulky, heavy boxes of diapers from the store shelf to your cart, then from your cart to the trunk of your car, then from your trunk into your house. Then do it 50 more times. Then do it 50 more times. With a load of groceries. With one of your kids with you. Now tell me if you see no value in having those same bulky boxes delivered to your door for THE SAME PRICE. It’s a huge convenience.
Actually, I tried to visit and ended up on diaper.com instead…. great site, but you need to be above 18 to enter…
This is a homerun. you’ll see
As a father of a large brood and internet investor, I think this is not as crazy as it looks. Diapers are an item (like vitamins and meds) that are consumed on a weekly basis if not more quickly (depending on number of kids and digestive rate). It is an easy ecommerce purchase because you can hit a reorder button quickly and not think about sizing for large intervals of time. it is a great way to build habitual purchasing at a site. One could then follow with higher margin items like meds, vitamins, bottles etc. And, unlike Zappos where returns are a major headache, nobody is returning the diapers to the site so diapers.com does not have to deal with that crap.
Mike – come visit my house and it may change your bachelor perspective
Agree w/ @Andy. It is a great service and my wife uses it all the time. Also, don’t forget that it is actually a business that generates revenues. The sign of 2001 is edegios and twitters that Arrington gets excited about and invests into. Diapers.com is the sign that people once again are starting to look at investments as businesses, not something they hope to flip to some idiot at a large company.
how many of you actually looked at the site? they sell way more than just diapers. it should really be called “babysupplies.com”. baby stuff is a great category because you buy LOTS of it, frequently and your orders may be very similar from week-to-week. further, you’re usually VERY busy and tired when you have a baby. so you will pay a premium for delivery. I would. I did (although not through diapers.com because it wasn’t around yet).
when you have a baby you are VERY focused on the baby. you spend a LOT of time thinking about it and it’s actually nice to have a site where it’s NOTHING but baby stuff. it aligns well with the crazy baby focus that new parents get.
i see the main issue as can they compete with drugstore.com, amazon.com or other big online retailers.
who knows if they’ll make it, but it’s not as crazy as you think.
Don’t judge a book by its cover. It may seem like 1999 to an entrepreneurial bachelor, but as a busy father, this is a great site. I use Diapers.com all the time, its fast, easy, and arrives at my door in 2 days. Plus I always spend more then $50 to get free shipping. Trust me, 2 years ago I would have never thought of endorsing a site like this, but when you have a rugrat, anything that is convenient and cheap is a plus.
A site called diapers.com could EASILY make a lot money, but not necessarily THIS site using this model.
The domain itself is golden, and from a business standpoint they don’t even have to actually sell diapers. The site ranks #1 in diapers and probably has a lot of type-ins.
Of course I’m probably aiming much lower and thinking of an idea that actually PROFITS and doesn’t just aim for huge revenue with low margins and high debt.
Maybe they are counting on an upsurge in business as people begin to crap their pants over the economic downturn …
Same price as retail, minus the sales tax, plus free at-home delivery equals tremendous loyalty.
I am an early investor, its an awesome business with great ecommerce metrics and very happy repeat customers. Management is as good as it gets
Just compared and Amazon is actually still $1.00 cheaper for a case of Seventh Generation. As a dad of a toddler, with my wife due in a month with our 2nd child, I got a bit excited when you said they had to lowest on Seventh Gen diapers. We get our Seventh Gen diapers and wipes auto shipped from Amazon every couple months, no reordering needed.
Those of you that aren’t parents don’t understand liking big bulky items to be delivered to your door and in my case automatically.
I know eco is a very big thing now.