Companies either became bankrupt or failed to achieve success due to their unimpressive and non-persuaded marketing capacity as well as other weaknesses. Companies usually fail to achieve complete success when they are not able to face the challenges in market via Internet.
Pets.com is one among many other online retailers that failed as a business-to-consumer e-commerce entity. Pets.com was a San Francisco-based company that sold pet accessories and supplies direct to consumers over the World Wide Web. In beginning of 1999, Pets.com appeared to be on a road to success in spite of the rising competition in the online pet market. However, the success never brought profits for the online firm and Pets.com decided to close its doors while it still had a positive net worth in November, 2000 just two years after its launch.
One factor that contributed to Pets.com’s failure was that it was in a very competitive arena, the pet supply sector. Pets.com was competing with many brick-and-mortar pet supply businesses, for example, Petsmart.com had brand recognition on which to build its site. Pets.com had the advantage of owning the most valuable domain name in the online pet market, but its competitors had other advantages. Unfortunately, this advantage was not used to its full potential and Petsmart.com continued to lead Pets.com in online traffic and revenues.
Another factor that contributed to the failure of Pets.com was the company did not make wise financial decisions. In order for Pets.com to get customers to buy online instead of going to their local supermarket, it had to undercharge their shipping costs. Another financial problem was Pets.com was operated on negative gross margins, and in the end, the company was no longer able to raise capital to keep the business afloat. They had to sell products below cost in order to compete, and they failed to recover from their losses. Another financial problem was that Pets.com made significant investments in its infrastructure, such as warehouses, without really having the money to undertake these investments. As a result, the company needed a critical mass of customers to simply break even.
The best factor that contributed to the failure of Pets.com was the fact that the company failed to give its prospective customers a good reason for its existence and to satisfy a need. Business model of Pets.com was not unique and did not offer consumers anything different from the other online pet supplies retailers. Pets.com along with others in the online pet market chose to enter a market that was not exactly very attractive for e-commerce. They just offered products that were already readily available to consumers. Most of the consumers can get their pet supplies at the same place they get their groceries Shopping online for these kinds of products was not any more convenient for them than shopping at an actual retail store which they can get pet supplies within short time rather than buy pet supplies online and wait for a couple of days to receive it. This makes an argument that there is no point to shop online.
Pets.com competed in the highly competitive pet supplies sector, and at the same, managed its finances poorly. These are those factors that cause failure to the company. The most obvious factor that affected Pets.com was they were unable to attract enough online customers to reach their goals. Consumers could easily go to their local grocery store and get the pet supplies they needed. There was no reason for consumers to shop at Pets.com.
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