An example of an E-commerce failure and its causes

E-commerce can assist company successfully, but also can bring failure. Pets.com is one among many other online retailers that failed as a business-to-consumer e-commerce entity. Pets.com offered consumers a wide range of product selection, large-scale inventory, competitive prices, and expert advice from a staff of pet-industry experts and veterinarians. It attracted many customers by offered an efficiently designed website.

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. Each of the pet e-tailers could easily be confused with its competition. 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. Many consumers just preferred to shop at local discount stores such as the grocery stores where they would be shopping for food anyway. Pets.com as well as the other online pet supplies firms failed to offer customers a better alternative to what they already had. Shopping online for these kinds of products was not any more convenient for them than shopping at an actual retail store.

Pets.com had become the leading online pet store, but after months of trying everything possible to cut costs, recover dwindling stock prices, and attempt to gain some profits, the online retailer saw no better alternative than to shut down business.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 demonstrating any background of achievements or success which most likely raised the confidence level of executives far beyond what it should have been.

Without any experience, the firm went public only a few months after its initial launch. Pets.com assumed the market and its revenues would grow quickly enough to allow for a profit before funding money was exhausted. Strongly 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.

Just like numerous other pure-play businesses, Pets.com went public too soon and spent money too quickly. One of its major mistakes was the excessive spending on marketing and advertising. Since funding was continuously available during the beginning months of Pets.com, they did not think twice about spending everything in hopes of increasing consumer awareness of the business which would hopefully lead to increased sales.

Some businesses can be successfully even with high shipping costs, but Pets.com did not have a chance to prove this. 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.