Thursday, June 12, 2008

An example of an E-Commerce failure and its causes - PETS.COM


Pets.com was an online business that sold pet accessories and supplies direct to consumers in the world over the World Wide Web. The company rolled out a regional advertising campaign using a variety of media, such as TV, print, radio and eventually a Pets.com magazine. The company succeeded wildly in making its well known mascot, the Pets.com sock puppet. The Pets.com site design was extremely well received, garnering several advertising awards. The company went public in February 2000; the former Nasdaq stock symbol was IPET. It was the last dot-com to go public before the bubble burst.


Pets.com closed its business in the same year (2000) that it went public. The reason that causes the Pets.com became failure is that the management and board realized that they would not be able to raise any further capital. They aggressively take actions to sell the company to others. The PetSmart has offered less than the net cash value of the company, and the Pets.com's board of directors turned down that offer. Later, the company announced they were closing their doors on the afternoon of November 6, 2000. In the time, the Pets.com stock had fallen from over $11 per share in February 2000 to $0.19 the day of its liquidation announcement. The Pets.com management stayed on to provide an orderly wind down of operations and liquidation of assets.

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