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Why Amazon sells used diapers (and Diapers.com doesn't)
Feb 12, 2008
What's more important to study, profit margins or customer experience? I occasionally see the press covering successful, customer-centric companies in a strange way. More often than not, the article focuses on the profit margins, or other traditional criteria, rather than the customer experience - the driver of the success.
Case in point is a recent Times article discussing the success of the online retailer Diapers.com. After noting the company's growing profit margins, the article delivers this hook:
The real trick to making the business work, though, is in how the company ships its less profitable goods. Rather than simply stuffing packages of diapers into a box that is roughly the right size for shipping, Diapers.com wrote software to analyze a customer’s order and select from among 25 different boxes to avoid U.P.S.’s charge for oversize shipping.
No doubt, the software helps. Operational improvements do lower costs and thus raise profit margins. But is that really the driver of the success?
The article goes on to wonder how well Diapers will compete against Amazon, the only other major site that sells diapers, noting Amazon's own operational improvements.
There's something missing here. It's the most important factor in online business: the customer experience. Process improvements lower costs, and price is an important factor in the experience, but the website itself is a major element of any online success.
Here's a quick test. Let's say I'm a parent - OK, I am that parent - shopping for Pampers Cruisers, a popular make and model of infant diapers. Here's what I get when I search the two competitors for "pampers cruisers."
Below, Amazon gives me this page, which forces me to scroll to see what sizes are available...
...and each product link leads to a standard product page, below...
...which is OK, except for the link to "used & new" diapers. (I'll stick to the new ones, thanks.) All in all, not bad, but not great.
But compare this to Diapers.com, below, which gives me a results page that requires no scrolling to find the right link.
Clicking either of the "Pampers Cruisers" links takes me to a page showing the grid below, which is obviously custom-made for the selling of these particular diapers.
Having taken a quick look, which site creates the best customer experience:
• Amazon's page that shows all the sizes in a long list, as though they were books?
• Diapers.com's focused results that lead to a grid, designed expressly for the buying of diapers, which clearly shows the various quantities, unit prices, and "buy" links for each size?
I'm not surprised that Diapers.com is doing well. Their operations allow them to match Amazon's low prices, but they go further than that. While Amazon sells diapers no differently from how they sell books, the Diapers.com shopping experience is tailored to the buying of diapers.
Remember this: if competitors have similar prices, the easier site has a competitive advantage.
If all this seems obvious, one must wonder why the press rarely points to the customer experience as the driver of a company's success. (One notable exception is this recent Times column on Amazon, in fact). Let's hope that editors everywhere will begin to see the light.
Great observations, as usual.
One other element of the experience that I think is often ignored, is how these items are packed in the box, and the overall unboxing experience.
Amazon has this down. Not too much tape, no packing peanuts, and usually a box not much larger than what is being shipped. As a result, Amazon's boxes are easy to open, and there's less guilt about how much you're recycling and throwing away.
As always, Mark, you make a great point about the comparable experience of the two sites. However, I'd still bet more people will buy diapers from Amazon due to the other conveniences that Amazon affords:
* Free shipping requires a $25 rather than a $50 investment
* One can combine other items into an Amazon order to receive shipping discounts
* People are familiar with how incredibly fast Amazon ships items
* Most people already have Amazon accounts and thus will have a quicker and more familiar check out process
* Amazon support (phone or email) is quite amazing
But to your point, I had a poor experience on Amazon the other day when trying to buy razor refills, because the way Amazon listed its items was more akin to books (as you mentioned) and thus it was confusing to get the right quantity/kind. However, Amazon has much better experiences for buying books, computers, music, televisions, and many of the more popular items on the site. If they find that diapers or razors are an important part of their business they'll likely work to get the right filters and metadata extracted to make it a better shopping experience. It will be interesting to see in what areas Amazon creates more custom stores for specific products over the coming years...
For me, Amazon has the more convenient site. I have ordered diapers from Amazon in the last year, and here's why:
- An interface that I'm familiar with, even if it's not customized to the particular item on sale
- Convenience of having my credit and delivery information already provided
- Privacy benefit of sticking with a vendor that already has my credit and home address, rather than providing such sensitive information to yet another vendor.
Convenience can depend on the user and use case.
Interestingly, I just bought diapers at diapers.com this morning. Not the first time; certainly won't be the last, either.
As I was at the site, I was thinking about how good the UX was, and how their store should serve as a model for other niche services. Really, their website is great.
And, to Joe's point above, about the packaging that comes with your product, I can say that diapers.com nails it. We tend to buy two cartons of diapers at a time. The two cartons come in a box that fits them like a glove. I fully believe the bit from the Times about their having boxing algorithms that smooth the packing process. In fact, the last time we received an order from them, I marveled at how well the shipping carton fit around the two diaper cartons. It makes sense that they've thought it through to that level of detail, but it's, sadly, an all-too-rare level of attention to detail.
And, since I'm gushing anyway, one more clever bit that diapers.com offers (and you might not know this unless you actually place an order) ... is that in addition to free shipping (at $45 or something), they also offer you 5% back if you order over $75 of merch. The brilliant part is that the 5% is only good on your next order from them, and it has to be within 60 days. But their system handles it all automatically (no codes to remember, no coupons to lose), and since their prices are already so good, it works out really well for the customer.
I love Amazon as much as the next guy. But I'm totally sold on diapers.com as the way to get diapers.
I would add a few points in favor of Amazon's experience for diaper buying.
1. If you are a prime member, I get my diapers in 48 hours for free. This is great to have when my wife sends me an email to get more more diapers, laundry detergent, formula, etc... In about 2 minutes I can have the diapers ordered and on the way.
2. Amazon doesn't sell diapers in individual packs like diapers.com. Some may think this is a limitation, but who buys 1 pack of diapers at a time anyhow? Instead amazon sells their diapers in packs of 2 - 4 depending on product and size which happens to be the same quantity so that they are already preboxed from the manufacturer. This means no extra boxing by Amazon or packaging needed. Just put a shipping label and put it in the mail.
oh and yes - I have used diapers.com Being able to buy individual quantities of items is really useful when you are traveling somewhere for 1 - 2 weeks and can just order stuff and have it arrive at your destination... like grandma's house who may not share your same sensibility in organic products.