An example of an E-commerce failure and its causes

Starting in year 1999, many EC companies, especially e-tailing and business-to-business ones, began to fail. Well-known business-to-consumer failures include eToys, MarchFirst, and Webvan.com. Well-known business-to-business failures include Chemdex.com, Ventro.com, and Verticalnet.com. A survey by Strategic Direction (2005) found that 62 percent of dot-coms lacked financial skills and 50 percent had little experience with marketing. Similarly, a large number of companies failed to ensure they had the inventory and distribution setup to meet initial demand. The large number of failures does not absolutely mean that EC’s days are numbered. The dot.com failure rate is declining sharply (Rovenpor 2003).

Pets.com is one amongst many other online retailers that failed as a business-to-consumer EC entity. Pets.com was a short-lived online business that sold pet accessories and supplies direct to consumers over the World Wide Web. Pets.com failed as the online bubble began to burst in mid-2000. The strategic cause evolved from decision making that determined the objectives, resources, and policies of the organization is the poor business model. The absence of sound business strategies will lead to this outcome and cause the lost of declared business benefits. Pets.com’s business model was ordinary thus did not offer consumers something unique from the other online pet supplies retailers. Moreover, Pets.com entered a market of selling low-margin food and supplies that have high shipping cost. Therefore, shopping online for such items is less convenient if compared to shopping at an actual retail store.

Failure of dot.com may not be attributed to a single factor, but to a combination of factors. The above findings demonstrate that poor or non-existent business plans and failure to meet customer expectations that causes dot.com failures. In light of the venture capital situation after the bursting of the dot-com bubble, the Pets.com management and board realized that they would not be able to raise further capital. At last, they made decision to sell off the business.