Description: It is good to be the chief executive of a company that’s about to ship 500 million diapers in a single year. Quidsi is trying to outsell Amazon. They are competing in a new way.
Source: Businessweek
Date: 10/10/2010
It is good to be the chief executive of a company that’s about to ship 500 million diapers in a single year. For one thing, you get to drive a golf cart as fast as you want in your new 1,250,000-square-foot warehouse. Click here for rest of story
Questions for discussion:
- How does Quidsi compete using one of Porter’s four generic strategies?
- Do they compete differently in the marketplace than Amazon?
- Where does Quidsi add the most value in their value chain?
Kristin Q
Quidsi is using a focused low cost strategy by targeting a specific group of people…mother’s with small children requiring diapers and not enough time to get to Costco to get the best deals so they will spend the money to save the time. Quidsi uses robots in their operatons logistics to add value in their value chaing, they do all the heavy lifting and its a automated process saving the company time. They don’t make their money selling the diapers which is interesting, they use that as the draw to get customers in, the focus is on shipping bulky, low margin commodities quickly, and along with needing diapers comes the higher margin items wipes, formula, shampoos) that consumers might as well just pick up while shopping on this site. They have also allowed room for expansion in their business plan and seem to be effectively competing with their number one competitor Amazon.
Esmarilin
By playing Goliath Amazon is making a huge mistake.¸They are underestimating its rival Quidsi, who has the chance to go head to head with amazon. Quidsi who uses a focused low cost strategy tries to incoportate many competitive sources such as, giving the customers more value for their money by saving them time,delivering great customer service which they do by delivering in 2 days, and trying to achieve lower costs. Amazon who has quickly become aware of quidsi has counteracted most of quidsi`s promotions and has even created new mother program to make it more difficult for quidsi to maintain a competitive advantage but what Quidsi has that amazon doesnt is an efficient information system. Quidsi has taken advantage of its logistics and robots to create efficiency in its headquarters to pack more and pack faster. It also has helped them become more precise on when to order and the quantity to order which helps them save money and time. They are doing things smarter and by doing so it will help them in their battle against Goliath.
Scott S
Obviously Quidsi is using a focused low cost strategy but it looks like they are trying to get big enough to become an overall low cost strategy player. They appear to be doing this by adding new products quite regularly. They have definitely added the most value in the value chain in the operations part not only with the automation but with the new warehouses that are there. It seems to me that they are following the same pattern that Amazon did, they started with a single product and have quickly moved into the tens of thousands of products. It appears to me that this company is either on a course to become one of Amazon’s bigger rivals or that Amazon will buy them out.
Kayley F
Answer to number 2:
At first glance, Quidsi works on a similar scheme to Amazon, but once you examine them closer, the differences make each very competitive against each other. Quidsi’s main differentiator is that they carry mass quantities of few products all aimed at a target market of baby care, which reduces many of the costs of shipping various sized items. Amazon, on the other hand, is mainly focused on selection, offering vast quantities of many goods that span numerous markets. Quidsi has also seen how their strategy has worked with diapers, so they created a similar website for the home hygiene target market. The expansion of targeted market e-commerce works well for the owners of Quidsi, and this will stay their competitive advantage over Amazon.com.
Josh F
Quidsi is using a focused low-cost strategy in their business operations. They are directing their products to the baby care market and can save the consumer money by good customer service, faster delivery times, and lower costs. Quadsi adds most of their value in the value chain by the robots they employ. These robots add a competitive advantage being able to lift heavy products, and by saving alot of time. This in turn, will save the organization money. Quidsi competes differently than Amazon in the marketplace becuase they have a direct aim of supplying baby products. Amazon caters to numerous market segments while Quidsi just wants to have a monopoly in their own field.
Adam G
Quidsi is using a low cost focused strategy. Quidsi’s costs are high, as the article mentions they are only making a 5 to 7 percent operating margin, but their effective methods in reducing the operating and outbound logistics grants them the low cost status. Quidsi’s efficient warehouses gives them a huge advantage over Amazon, who doesn’t have the advanced robotic operating system, as they are able to get their products off the shelf and into the delivery stage in a timely manner. I believe that Quidsi adds the most value to their outbound logistics. Quidsi has also added an extreme amount of value to their operations with the purchase of robots but constantly try to work on their shipping aspect of the value cahing. Amazon also prides themselves in a timely delivery of a product, but the difference between them and Quidsi is the specialization that Quidsi offers. The specialization of product allows Quidsi to set up warehouses in urban areas, which Amazon cannot do because of their huge selection of product. Amazon has a overall low cost strategy and it is difficult for them to compete with the specialization companies such as Zappos.com, which they ended up buying out to win that war, and Quidsi.
justine kennedy
Quadsi is working with a focused low-cost strategy. They produce mass amounts of their product therefor lowering costs and focus on one tarket market (people with children). Amazon works with a large differentation strategy as they deal with multiple products and multiple buyers. Quadsi has an advantage in this respect as they are able to produce quick and efficient results for their targetted cunsumers. This in turn has created a strong devoted customer base as they have mastered their market segment. Building off of their sucess they are also able to monitor and create other valuable resources for their company such a corrosponding e-commerece system.
Brett B
The Quadsi company has placed themselves in the focused low cost strategy of Porters four generic strategies. They are focused in providing bulk diapers to a market group consisting of busy parents who are unable to find time to head out to the store themselves. The warehouse stores mass amounts of specific products which allows for lower costs. The difference between Quadsi and Diapers.com and Amazon.com can clearly be identified by the amount of products offered. Amazon is concerned with broad differentiation. The possibilities for expansion may pose a threat to amazon if Quadsi decides to branch out into more markets however it may also take away the low cost competitive advantage that Quadsi currently has.
Breann L
Quidsi is using a focused low cost strategy. They are focusing on a low margin products involved with baby care. They are targeting the specific market of busy working parents who may not have to time to get to the store to buy baby care supplies and are willing to pay more online for quick delivery. They work differently than amazon by having a specific market and focused low cost strategy. They add value to their value chain through using the robots as technology to help save time and costs in the organization and delivery of their products. These robots along with the focused low cost strategy allow them to quickly ship their commodities to the customers.
Kaydree S
Quidsi competes in the diaper industry by using a focused low-cost strategy. They target busy mothers by offering them the best priced products as well as the delivery of these products which provides convenience. Quidsi may appear similar to Amazon, but in my opinion they are quite different. Amazon offers a huge selection of products for various target markets, where as Quidsi offers a small selection of products for one specific target market.
Celest-
To effectively compete in the market, Quidsi uses a focused low-cost strategy. In its operations, Quidsi specializes in selling to a specific demographic: mothers/parents of young kids. To offer low prices on diapers, Quidsi has succeeded at employing just a few employees while putting to use robots and software (technology) to work faster hence adding value in their chain by delivering orders quickly while offering good customer service to its customers at the same time. This is the competitive advantage that has seen Quidsi stay in business over the past 4years. It’s not a wonder Quidsi now has such loyal customers who even market for it!
Carlos.Z
I think both of Quadsi and Amazon have their different competitive advantages to target various markets of customers. For Quadsi, they used a low cost strategy and are geared towards a specific or smaller market segment “baby products”, which for the parents of their children. Whereas, Amazon has a much broad market segment as they sell numerous products to various types of consumers. Specifically, Quadsi besides they use low cost strategy, they also make some effort on their value chain. They brought in the robots to deal with the carrying issues and they also improved the delivery of shipping. On the other hand, the competitive advantage of Amazon is that the company mainly focuses on multiple products. They dedicated to service and satisfied all different kind of buyers. Own a large amount of customers could be a good way to benefit the company.
Troy K
Quadsi focuses mainly on a low cost strategy. They try to trim cost were ever they can robots are used inside warhouses to decrease on wage expenses and products are purchased directly from the suppliers. They are constantly having meeting on way that they can fine tune their operations. Quadsi differs from Amazon through specialization they focus on goods aiming at infants. They end up loosing money or making very little of of the huge amounts of diapers sold in order to draw parents into their website to purchase other goods focused on this distinct market. Amazon on the other hand sells a very wide rage of goods to very different markets. Quadsi increase value in their value chain mainly through purchased supplies inbound logistics and outbount logistics. They are able to purchase goods directly from suppliers and ship them back out very efficiently. They are able to ship orders over $49 for free with a delivery time of 2 days, with 74 percent of their shipments going out overnight, and are loso working on being able to ship to and around manhatton within an hour of placing an order.
James Clark
Quadsi was using a focused low cost stratagy, but they are widening up on the focused part. They started with the diapers and baby products but with the introduction of soap.com they have introduced more of a broad market, low cost stratagy. Sure they are only selling online but they are becoming more like an on-line Wal-Mart. They’ve been cutting costs on labour using the robots and buying in bulk. Their website Diapers.com shows evidence on why they are only making 5-7% margins at peak capacity, not only are their products comparable to the prices that are offered in store like Wal-Mart and Superstore but they offer free shipping, and large savings in coupons and other discounts as well. That is certainly a great way to keep a loyal customer base. And it is no different with their other website Soap.com. Great savings their too.
Paige
Quidsi uses a focused low cost strategy. They are focused extensively on diapers, although they are adding more things to their product line they are still focused on selling to busy parents, mainly mothers with babies and/or small children. They use robots in order to cut costs because the robots are specialized and dont require extensive training or wage costs to the company. They got a warehouse after they realized they needed one becuase the garage wasn’t big enough, allowing them to sell even more and the deal with P&G allowed them to get more diapers without having to go to stores and buy out all their stock.By determining when and how much they need to order, they are never too overstocked and have a good amount of cash on hand. They have meetings on how they can make their production and company even more efficient.
Tyson B.
Quidsi does have a different competitive approach than Amazon. They are catering to a niche market while Amazon is focusing on a large range of products that encompass a far bigger customer base. Although, having a large and diversified inventory can create issues with low margin products sitting in limbo. Amazon may sell a substantial amount but, you have to ask how many of their other listings go unsold and are eating up operational costs while sitting. With todays market conditions it is safe to assume that a large majority of these slow moving products are bought and sold on very small margins. The idea behind such products is sales volume. Quidsi is focusing a low margin product and that is where their advantage lies. They can focus on developing sales volume of one product without the holding cost of tens of thousands of other products (Amazon does maintain warehouse facilities but also relies heavily on drop shipping, etc.).
Kace W
Quidsi uses a focused low-cost strategy. They target a specific niche, which is parents who would rather pay money to save time, and ship diapers to them at a low cost, and fast shipping rate, although now that they have begun to expand, they are broadening out there strategy, well they still focus on parents, they are now beginning to sell more things, related to babies. Quidsi is very efficent in the way that they will do whatever it takes to cut costs, to make more of a profit, for example if it is cheaper to get in there car, and deliver the diapers themselves they will do that, they also use robots to be more efficent, and cut costs that labour would cost. They compete directly with amazon, because they are focused on one type of niche, whereas amazon focuses on a broader group of people, and selection, and they sell everything. Quidisis value chain is very efficent in the inbound logistics and outbound logistics because they roughly know how much inventory they need, to keep cash freed up, but have enough to ship out what they need (85-95%) of the time, and they are able to ship out there products very quickly.
Brittany H
Quidsi competes using the focused low cost strategy that is in Porter’s model. Its focus is mainly on diapers so it caters to a niche market of parents. There goal is to get you there to buy diapers and then suck you in to buy the other products that they offer. Quidsi adds the most value in their value chain in there outbound logistics because of there quick shipping and there free shipping which draws customers in. The robots that they have in there warehouse help them. The location of there warehouses and how quick they can ship really helps them.
Sydney H.
Quidsi adds the most value to their inbound and outbound logistics, which creates a competitive advantage over Amazon.com. The use of robots, computer-aided manufacturing systems, has allowed for extremely efficient outbound order processing. For example, the robots choose which of the 23 different boxes is the best fit for the mix of products being shipped and brings that box directly to the human “pickers.” These robots also create operations advantages by increasing operation efficiency in ways that humans cannot. Complex algorithms add inbound logistics value. These algorithms tell Quidsi exactly when to order stock: preventing excess inventory storage costs and insufficient inventory to fill orders.
JP Pohl
One of the reasons they have had a great amount of success in these endeavors is that it appears that the products that they sell, either on diapers.com or soap.com, generally come from a limited number of suppliers/manufactures. P&G not only make diapers, but a wide range of toiletry products. The same goes for KimberlyClark, who own the brand Huggies, and so forth. If you go on to the diapers.com site and take a look at the number of brands they have, it does become quite apparent with some research that many of these brands are owned by the same limited circle of companies. When you are only dealing with a few, select suppliers it keeps your costs down when you bring in the stock to fill your warehouse since a large portion of it will be arriving from only a few different plants and warehouses. The toy market, however, seems to be a different game as there are indeed a few major players who make a large portion of toys on the market, but there are many other specialty brands. Also, they are departing their familiar territory of being a low-cost, specialty retailer and are broadening their inventory base which might be territory their value-chain will need to be adjusted for.
Georgina Pina
Their strategy is focused market, basically diapers and personal hygiene products and it might be differentiated because of their great management of logistics, and that’s why they are now thinking about expanding, as she mentions with the “space of growth”.
Quidsi is adding value in the logistics part of the value chain, with all the investment they put on the technology for the inventory management. Thanks to it they have managed to run a complete business mainly based on technology, because of the robots that arrange all the stocking units in the warehouse. The value has been added in the inbound and out bound logistics because of the computer-aided and internet linked systems that they have with their supplier and customers and with the information system carried out inside these warehouse.
Krystle Hurley
I would say that Quidsi competes using a “focused, low-cost strategy.” They are selling to a specific segment of the market, and their use of technology allows for cost savings in that they don’t have to pay as many personnel as would normally be needed to efficiently run their warehouse.
This highlights one of the differences between Quidsi and Amazon – Amazon has a broad range of buyers and sells many different types of consumer products whereas Quidsi is focused mainly on baby supplies (i.e. diapers, baby shampoo, etc.).
Quidsi adds value in the “operations” aspect of the value chain. Using robots to handle inventory not only increases productivity, but decreases the chance that there will be human error.