Interview & Podcast: Diapers.com Finds ‘Better Way’ for Parents
Listen to an in-depth interview with Marc Lore, CEO,
and Vinit Bharara, COO of Diapers.com. Listen now….
Marc Lore and Vinit Bharara are not just the co-founders of Diapers.com, they’re
dads. And, it’s from the personal experience of too many late night trips to
the store to pick up diapers and other products that the two came up with the
idea for their parent-focused business.
"I thought, ‘There’s gotta be a better way’," Mr. Lore, CEO of the
company, recently told RetailWire.
The company, which bills itself as "the largest online specialist offering
baby care necessities in the United States," had its beta launch in 2005
and initially resold diapers and formula purchased from warehouse clubs because
the company was not large enough for manufacturers to deal with it directly.
We "tried to make life more convenient for busy parents … And that
has been the theme since we started," said Mr. Lore. "We have been
extremely focused on offering an outstanding customer service experience beginning
with fast, free shipping, so we now reach about two-thirds of the country with
overnight shipping and a 6:00 pm local cut off time. So if you order 5:59 on
a particular day, two-thirds of the country will get it overnight and the rest
will get it in two days."
While service is paramount, the company understands price has a critical role
in the value proposition and has invested heavily in creating an efficient
supply chain to keep its costs, and those of its shoppers, down.
COO Bharara said, "Our mindset was to focus on the back end of our business
and logistics of our business — whether it be in the programs for our supply
chain management, whether it be the robots that we have in the warehouse, and
whether it just be in our entire philosophy of focusing on being the low cost
distributor so that nobody can deliver this stuff cheaper than us. And so we
have three warehouses positioned perfectly in the country to get product as
fast to customers as possible. That also gives us the lowest shipping rate
because we are closer to them. We have arrangements with UPS, FedEx and a bunch
of different regional carriers, again not only to get product faster to the
customer, but at the same time it actually winds up being less expensive."
Diapers.com recently opened a registry store location in Upper Montclair,
NJ. The cofounders saw it as a logical step in the company’s development.
"It was sort of a novel concept, no one had opened up, at least as we
have seen, a specialty registry store, that is a store whose sole focus was
on registry," said Mr. Bharara. "We thought that could be an interesting
thing to test. So most of this really was a function of testing, just trying
to understand customers’ needs and wants and also testing the concept of a
specialty registry store and see if we could potentially roll that out in other
markets, if this was or is successful."
Customer service is at the top of Diapers.com’s to-do list and employees from
the top on down take calls in the service center so they never lose touch.
"It’s part of our DNA, part of who we are," said Mr. Lore. "It’s
definitely empowering to know that you have the ability to take care of the
customer at any cost. We don’t have a budget, we don’t say, there’s no manual
that says what you can and can’t do. If there’s a problem, you basically can
take care of it at any cost, and customer service reps have on occasion spent
hundreds of dollars to take care of a customer after their first $50 order.
It doesn’t matter. In some ways, the easier the policy, the better the outcome,
right?"
Discussion Questions: What is your assessment of the opportunities and
challenges facing Diapers.com? Do you see the company’s physical registry
store test as a concept it can build on? Do you expect to see many other
e-tailers move to some sort of brick and mortar presence in the future?
Congratulations to these entrepreneurs. But someone is going to make a fortune by creating a diaper subscription service. Allow customers to plug in a few variables, and then have the diapers keep showing up at the door.
Good luck to them. Seems to me it’s just easier and probably cheaper to stop by Wal-Mart or Target and just load up. Will be interesting to see if they are still around next year. Sounds to me they are all hat and no cattle.
As I understood the article, the company is some five years in, so I don’t understand the “all hat and no cattle” comment. There are still tremendous opportunities in e-tailing. I see it over and over for those willing to put their minds and shoulders into it. Sounds like these two have done just that.
Wish I knew these guys three years ago when my world was diapers! Great concept!
They have been around for 5 years, so this is not a fly by night operation. Their website is clean and easy to use. I like the “suggest a product” feature a lot, as well as the “refer a friend” promotion they have going at the moment.
As a specialty e-tailer, I think the main issue for consumers is going to be whether the site is unique and convenient enough that it is worth shopping here, vs. just picking up diapers and other baby products on regular shopping trips. Free overnight shipping is a big plus and I guess the calculations say it is worthwhile on Diapers.com’s end.
The other question is will they be able to hang in there if a price battle breaks out between the big boys of retail?
Interesting to see they sell Costco’s Kirkland brand diapers in addition to their own private label. They also accept manufacturer coupons. Don’t know how successful they are, but this is a company that is clearly working overtime to make its customers happy.
Best of luck to them! It seems like a difficult profit model for such a bulky consumer product, like going back to the heady days of 1999. There’s clearly a segment willing to pay for this service, but it seems like a niche business.
Diapers.com is a better concept than most entrepreneurial ideas that seem to be less well thought out beyond the surface level.
We’ll pass on going the crystal ball route on the future of Diapers.com. That said, the company is interesting, innovative and, in our minds, worth watching. If you look at the company’s website, you will see a leadership team with some pretty impressive resumes. Marc Lore was previously the chief operating officer of Wizkids, a wholly owned subsidiary of The Topps Company. Vinit Bharara was previously the General Counsel for Topps.
Investors in the company include Accel Partners, Bessemer Venture Partners, BEV Capital, Mentortech Ventures, NEA and Nicholas Negroponte, the chairman of One Laptop per Child.