Amazon Bought Their Diaper Web Site, So These Women Have a New Startup

NEW YORK (TheStreet) -- Four years after Diapers.com's parent company Quidsi was acquired by Amazon (AMZN), two of its employees decided to embark on a new challenge.

After having figured out a better way to sell diapers to parents, Galyn Bernard and Christina Carbonell turned their focus to a glaring gap in e-commerce offerings for parents: children's basics.

Bernard, who has 5-year-old twins, and Carbonell, who has a 9-year-old and a 12-year-old, had devoted considerable time to delivering quality diapers inexpensively, yet as parents they still found themselves forced to pay absurd prices for their kids' leggings. They found they could buy an item at a store like Gap's  (GPS) Old Navy for a reasonable price but have to sacrifice quality. Or they could pay a lot more for a cashmere sweater that a child could outgrow in six months.

That was the impetus for their starting their new company Primary, an online retailer that sells basic clothing for less than $25 for kids younger than 10, in the hopes of capturing a significant segment of the $30 billion market in kids' apparel.

Bernard, 38, and Carbonell, 41, see their company as providing the core staples of a child's wardrobe. "It is just the one of everything that a kid wears that we think that they need rather than the 40 variations that have different embellishments and details on them that are constantly changing," Carbonell explained.

Carbonell and Bernard believe other children's retailers tend to overprice basics to compensate for the cost of trendier pieces. Making a solid T-shirt is less expensive than creating an embellished garment, so other retailers make up for their losses in the latter category by raising prices on the former, they assert.

By focusing in on providing the basics, Primary (whose site launched on March 31) can keep its prices lower while maintaining high margins. Carbonell claims her company's clothes are 25% to 50% cheaper than competitors'. Their costs are lower since they don't worry about creating new styles on a weekly basis. Right now Primary sells just 30 styles: one T-shirt, one skirt, one pair of pants and so forth.

Bernard and Carbonell declined to share any specific numbers on margins or revenue, though they did say their revenue is higher than they expected and that early metrics indicate positive signs of repeat purchases.


Bernard, left, and Carbonell.

So far Primary has raised $2.25 million in a seed round from Homebrew, Harrison Metal Capital and F Cubed, as well as $750,000 in venture debt.

"When we launch an item, we're about to carry it for five years and not five weeks," Bernard said. "So this is stuff we're investing in." This lets Primary put a lot of time and money into the presentation of each item, the product information, the photography and other functionality on the site.

Companies "like Carter's (CRI) or Oshkosh (OSK) couldn't do that because they're not going to have the stuff six months later," she claimed. "It makes for a very different site experience."

Both women come to the task with prior experience. Carbonell was the third employee at Quidsi, with Bernard joining her for her last four years there. While working at Quidsi including under Amazon's ownership, the two women worked on marketing, merchandising, developing supply chains and launching nine consumer-facing Web sites. This was "a great exercise in brand building for busy parents," Bernard said. "It helped us to refine our thinking for Primary and what it may look like."

Things are a bit different now that Carbonell and Bernard are running their own company -- with a much smaller team (just nine people). For example, they outsource logistics to a third party.

"Because we were involved with Diapers.com from the beginning, it feels like we're going back," Carbonell said. "It's fun to be scrappy and flexible and nimble in that way." She said they're applying their experiences from Diapers.com, "whether that's a tremendous focus on service from the beginning or knowing the metrics that matter (like customer acquisition) and the model to think about customer relationships. All of that applies here in the way it did there."

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