The diaper wars

Fascinating story on the diaper wars and efficiency:

… executives would not comment for this story, but the company is clearly aware of Quidsi. It started selling diapers in the summer of 2006, just a year after debuted. When Quidsi launched in July, adding an additional 25,000 products to their lineup, the site was strafed almost from the minute it went live by price bots dispatched by Amazon. Quidsi network operators watched in amazement as Amazon pinged their site to find out what they were charging for each of the 25,000 new items they initially offered, and then adjusted its prices accordingly. Bharara and Lore knew that would happen. “If we put something on sale, we usually see Amazon respond in a couple of hours,” says Bharara.

Mick Mountz is CEO of Kiva Systems, the company that builds the orange robots in Quidsi's warehouses. He also worked at Webvan, the company that lost $1 billion from 1999 to 2001 trying to be the first to build an efficient online grocery store delivery system. “The problem with Webvan,” he says, “was figuring the economics inside the warehouse. Plastic buckets were getting routed all over, and it could take hours to fill one. We would put one tote into the conveyor system and it might pop out two and a half hours later with one tube of toothpaste. There were four and a half miles of conveyor belts in there.” So Mountz rethought the whole Web commerce issue as an efficiency problem. He believes Webvan would still be around if Kiva had existed in 1999. One of Kiva's other customers is Zappos. Amazon, as a whole, however, is not, yet. …

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