How I Did It
VIDEO • HOW I DID IT

How Diapers.com Gets Customers Coming Back
 

Marc Lore and Vinit Bharara lure moms to their websites to buy diapers, soaps, and other essentials. Quick delivery, simple experience, and good customer service gets them to return. When Amazon acquired the sites in 2010 for $540 million, they were earning $300 million in revenue.

How to Get a Customer For Life

From detergent to diapers, Quidsi founders Marc Lore and Vinit Bharara's portfolio of e-commerce sites are all targeting one customer: the busy mom. After launching Diapers.com in 2004 and bringing to profitability two years later, the duo launched five more sites (including Soap.com) and the company was acquired by Amazon for a reported $540 million in 2010. The secret to their success? Forget the quick sell and focus on keeping a customer for life.

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Video Transcript

00:07 Marc Lore: My name is Marc Lore. I'm the CEO and co-founder of Quidsi.

00:11 Vinit Bharara: I'm Vinit Bharara. I'm the co-founder and CEO of Quidsi.

00:14 Lore: Quidsi is a holding company for a portfolio of e-commerce websites that are focused on the mom demographic. So the websites we currently have are diapers.com which is baby-focused, soap.com which is an online drugstore, wagg.com which is a pet store, yoyo.com which is a toy store, casa.com which is a home store and beautybar.com which is a prestige beauty site.

00:37 Lore: So Vinit and I came up with the idea back in 2004 and started working nights and weekends in 2005, and sort, of with our own capital, built the company. We saw brick-and-mortar stores, the Wal-Marts and Targets of the world, using these products to build relationships with mom and the end consumer, bringing them into the store and selling them everything else. So we thought that was an interesting model and maybe we could replicate that online. And so we started with selling the loss leader product to basically build a relationship with mom. And once they had the passion for the brand and they were shopping with us on a weekly or a monthly basis that they'd start to fall in love with that brand. We were losing money on every box of diapers that we sold. We weren't able to buy direct from the manufacturers.

01:26 Bharara: And so, we would have to go with our parents and then our families and go to the BJs with our credit cards and clear out their entire store and go to the next store and go to the next store, and so, just to keep up with the demand and so early on it was a bunch of stuff like that. Once we got in front of them so frequently, then we had the opportunity to treat them well every time, get their order to them the next day. If they had a call or any problems or any questions, we would treat them really well when they inquired of a problem potentially, make the user experience really simple and clean and easy to use.

02:02 Bharara: On Casa there's a functionality that we have, it's a style board that you can create, so it's similar to Pinterest, although it's on our website where you can pin different products and create your own rooms and see how they go together and send it to your friends. We have other things that we're doing, for example, we're launching an auto-ship program for your diapers and your basic essentials so we can tailor that, again, to that occasion. All these things, again, foundationally, are about just very simply how do we best treat the customer. It's not sort of the high-low discount sort of model. It's this very, sort of stable, "How do we build assets? How do we build long-standing customer value proposition that they're going to want?"

02:44 Lore: People will, from time to time, look and find these great deals on some of these sites, but they're really one-off purchases. There's no loyalty to those brands. The loyalty is to the discount itself. But I think with Quidsi the loyalty is to the overall value proposition.

02:59 Bharara: And that's really our retention strategy. It's not, there isn't sort of, there's a lot of math that we do behind the scenes, but foundationally it's just that.

Last updated: Mar 16, 2012

NICOLE CARTER is Inc.'s San Francisco bureau chief. She was previously an editor at New York Daily News, and her work has also appeared in Consumer Reports magazine.
@nicoleckinc