The development of E-commerce undergrounds a rapid changes in today's world. Internet-based firm have to be aware of the management plans and strategy and be updated in order to keep themselves up with the current changes. Otherwise, they might be eliminated.
One of the e-commerce failure can be shown by Pets.com. It was a short-lived online business that sold pet accessories and supplies direct to customers via world wide web. It began operations in February 1999 and ceased in November 2000. It is not bankrupt but self-liquidated. The company succeeded in making its mascot which is the Pets.com sock puppet. Besides that, its website design is well received and had been garnering several advertising awards. Pets.com was successfully in building brand recognition. Since then, why it went into liquidation?
There are many causes that make Pets.com failed in e-commerce. The main reason would be the company was weak on fundamentals and actually lost money on most of its sales. Pets.com's revenue is less than the advertising cost. It earned $619,000 and yet spent $11.8 million on advertising during its first fiscal year. It lack a workable business plan. It was selling merchandise for approximately one-third the price it paid to obtain the products even before the advertising cost.
Other than that, this company had a improper selling strategy. It tried to build a customer-based by offering discounts and free shipping with the purpose of shifting customers into higher margin purchases. However, customer buying patterns failed to change and it is impossible to turn a profit while absorbing the cost of shipping. Thus, it only hastened the firm's demise.
The uncertainty of the existence of substantial market was another reason that caused Pets.com went into liquidation. There was no independent market research preceded the launch of Pets.com. In light of the venture capital situation, Pets.com management realised that they were unable to raise further capital. As a consequence, they undertook the action to sell the company. US$300 million of investment capital vanished with the company's failure.
Additional Information:
From this case, it taught us that do not work without plan. Quality is important, to attract customers. But if the cost is too high to be afforded, it is no point being the best quality seller. Unless you are planning to be a charity company to benefit the society XD
ReplyDeleteYup, we should learn from the lesson from the history. Failure makes success, hence, we should find a balance point, between quality of goods and services that we are providing, and the cost of these goods and services.
ReplyDeleteNice information, most of the business are to success in online business by using ecommerce at the same time some of business are needs to failure for using ecommerce. so your good information is best example for ecommerce failure. thanks for your wonderful sharing.
ReplyDelete