In the Gouldsboro warehouse, robots do the heavy lifting Photograph by Danielle Levitt for Bloomberg Businessweek
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It is good to be the chief executive of a company that's about to ship 500,000 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.
"Hang on!" says Marc Lore, putting the hammer down.
The golf cart leaps forward, racing through 10-foot-tall canyons of diapers stacked on pallets. At 25 miles an hour, the diaper mountains blur by, here a pyramid of Huggies Little Snugglers with pocketed back waistbands, there a tower of Pampers Swaddlers Sensitive economy size packs. Skyscrapers of Enfamil, Similac, and Luvs Ultra Clean Wipes flash past.
"You could put about 20 football fields in this place," says Lore, CEO of Quidsi, the parent company of Diapers.com' the Internet service that by year's end is expected to ship Diaper No. 500 million. Next to Lore, in the passenger seat, is Vinit Bharara, co-founder and COO. Lore and Bharara, both 39, have been friends since grammar school in New Jersey. Also on board is Scott Hilton, Quidsi's executive vice-president for operations, who designed the warehouse, which is in Gouldsboro, Pa. The place is a third of a mile long; the way Lore drives his cart, it takes him about a minute to travel its length. High overhead, motion-activated lights flicker to life as he speeds along, leaving a sky trail behind as they zoom past the walls of diapers.
Lore can go almost anywhere he wants inside the warehouse. He can duck through its 53 aisles of supplies with about 50,000 different products. He can slip by its loading docks, where trucks are being stuffed with packages destined for 20 states. (The company also has warehouses in Reno, Nev., and Kansas City, Mo.) But there is one place Lore cannot go. He cannot go where the robots are. The warehouse features about 260 robots, working in a 200,000-sq.-ft. expanse delimited by bright yellow paint and filled with square racks of shelving. They are short, orange, rectangular machines that lift and deliver the shelf pallets to human "pickers" at stations around the perimeter. They move in balletic formation, dancing like the magic broomsticks in Fantasia, sometimes stopping and swiveling in place to change direction. They wait patiently for a column of their peers to pass or make orderly lines in front of the packing stations before dropping off their loads. Each robot weighs about 800 pounds and can lift 3,000 lbs. of merchandise.
"They have sensors and they're supposed to stop if they see you," says Hilton. "But it's better to stay out of their way. They're very quiet, and you don't hear them coming."
So Lore avoids robot territory, driving down another canyon and pulling up to a door in a dark corner. Beyond it is an equally impressive space, another 400,000 sq. ft. yet to be used. "Room for growth," says Lore, letting the sheer size of the space do most of the talking. It is easy to understand the message here, and in everything Quidsi does. To survive as a commodity-based retailer you need ridiculous, giddy-making scale—because no matter what you're selling, if you're selling online, you are always, always at war with Amazon.
Lore and Bharara did about $180 million in revenue in 2009 and expect to bring in about $300 million in 2010. Just five years old, Quidsi (the name means "what if?" in Latin) is already breaking even in a category that wasn't supposed to work on the internet: Quickly shipping bulky, low-margin commodities. The partners don't make money on diapers, and never planned to. Diapers are the draw that brings in loyal customers who order over and over. The money comes when a shopper throws in one of the other 25,000 SKUs, or Stock Keeping Units, that Diapers.com lists on its site—higher-margin items like brand-name baby shampoo, wipes, and formula. (Soap.com, just introduced, adds another 25,000 SKUs. Lore and Bharara want to have well over 100,000 by the end of next year; they're planning to get into toys, too.) According to the partners, their customers are "sticky," ordering again and again and telling other parents about the service.
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