An example of an E-Commerce failure and its causes

E-commerce has been familiar with the world nowadays. There are so many successful examples of e-commerce. Such as
1) Amazon.com which is an online store electronics, apparels, computers, books and so on.

2) E-bay.com provides a market place for customer to sell and buy products.


3) Expedia which is a company serve customer with cheap airfare, hotels, car rental, vacation and cruises.



However, there are also a numbers of e-commerce failures. One of the examples of an E-Commerce failure I found out is Pets.com.

It was an online provider for pets’ accessories and supplies directly to the customer over World Wide Web. It was launched in 1998 and went into liquidation for 268days. After that the site and domain was purchased in early 1999 and started to make advertisement through variety of media such as television, radio and eventually a Pets.com magazine. The Pets.com sock puppet is well known for everybody. In 2000, the company went into public as they expand their market and IPET was their former Nasdaq stock symbol.

However, in the early of November 2000, the company said it is going to sell off its assets, including its distribution center equipment, content and the stock puppet brand icon.

Larry Barrett reported in Cnet news that Pets.com was shutting down because it was unable to find a purchaser or financial banker. Pets.com was finally closed in 9th November 2000. For an Internet company to survive in an environment for business-to-consumer it is very hard.

One of reasons that caused pets.com to close down its business is lack of a workable strategy plan. They tried to build customer base by giving more discount and free shipping to their customer. In fact, the shipping fees were very high because of the products such as cans of pets’ food and bags of dog litter which could not generate high profit for the company. The company was selling one-third of the original price to the customer which means that the company did not make any profit from the selling of merchandise. For the first two quarter in the year 1999, the company had negative gross profit margin; while the third quarter, the company net sales before operating expenses was amounted to $1.62million which a significant amount. Besides that, the company was trading below $1 for the few months before they closed down the business. Furthermore, employees who resign from the company were not replaced which also caused the company could not work effectively and efficiently.

References can be found at the websites as below:

http://en.wikipedia.org/wiki/Pets.com

http://news.cnet.com/2100-1017-248230.html

http://news.cnet.com/Pets.com-moves-part-of-litter-to-Midwest/2100-1017_3-245416.html

http://www.businessweek.com/careers/content/dec2000/ca20001213_830.htm

http://news.cnet.com/Pets.com-to-play-in-public-market/2100-1040_3-234303.html

http://news.cnet.com/Pets.com-goes-belly-up/2100-12_3-267376.html