The internet creates new connectivity with customers and offers the opportunity to expend markets. However, it also has the potential to expose a retailer to more source of risk. There are some extremely successful virtual Ecommerce companies such as eBay, Google, Yahoo! and etc. But, there are also a large number of Ecommerce companies began to fail. Pets.com is one among many other online retailers that failed as a business-to-consumer (B2C) e-commerce entity.
Pets.com was a San Francisco-based online business that offered pet products, information, and resources to consumers over World Wide Web. The site was launched in November, 1998 founded by web company developer Greg McLemore. Julie Wainwright, previously CEO of Reel.com, was appointed CEO of Pets.com. The company received over $50 million in funding from backers including Hummer Winbald, Bowman Capital, Discovery Communications, Walt Disney, and Amazon.com.
In the beginning of 1999, Pets.com appeared to be on a road to success. The company succeeded wildly in making its mascot, the Pets.com sock puppet. The Pets.com site design was extremely well received, garnering several advertising awards. Pets.com offered consumers a broad product selection, large-scale inventory, competitive prices, and expert advice from a staff of pet-industry experts and veterinarians. It also offered an efficiently designed website that attracted many customers.
Although Pets.com had a first-mover advantage being the first of these virtual pet stores to enter the market but Pets.com was in a crowded field. It operated in a very competitive market, Pets.com, Petopia, PetsMart.com, and Petstore.com all launched within months of each other in 1999. This market competition forced Pets.com to advertise extensively and to sell goods below cost. Noting the high costs of delivering items such as dog food and the thin profit margins involved. Pets.com decided to close down in November, 2000 just two years after its launch.
One problem with Pets.com’s business model was that it was not unique and did not offer consumers anything different from the other online pet supplies retailers. Another problem that Pets.com faced was that it entered a market of selling low-margin food and supplies that are extremely costly to ship to consumers.
The reasons for the closing of Pets.com relate back to an unsustainable business model and unachievable expectations. It acquired large amounts of funding from venture capitalists without considering the consequences. Without any experience, the firm went public only a few months after its initial launch. Pets.com assumed that the market and its revenues would grow quickly enough to allow for a profit before funding money was exhausted. Too strong of a focus on market share instead of on gaining profits led to the downfall of Pets.com. Also, another contributing factor is that this e-tailer may have overestimated the number of online customers it could gain in the pet market.
After collapsing, its assets were sold to Petsmart.com, a click-and-mortar pet supplies retailer. Refer to http://www.petsmart.com/home/index.jsp. There are many reasons why some firms may not want to enter the online selling market, and the experience of Pets.com is just one example of many.
The top ten E-commerce mistake can be refer to:
http://www.e-consultancy.com/news-blog/364700/top-10-most-common-e--commerce-mistakes.html
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