E-Commerce had been known for its successfulness, but early of 1999 there are a huge number of E-Commerce companies start to fail. They are mainly e-tailing, B2B and B2C companies.
eToys.com was an example of B2C company which failed during the dot.com era. The company launched in 1997 and was co-founded by CEO Toby Lenk, COO Frank Han and Bill Gross. eToys is a retail website which sells toys through the internet. It seemed to be the perfect idea for parents who are busy around the clock. It offers thousands of toys in every category from the comfort of their homes. The side had interesting features as well, where it includes gift recommendations by according age and background of popular cartoon characters, from Madeline to Barney.
eToys had a successful IPO on May 20th, 1999. The offer price was at $20 and it closed at $76 on the opening day which helped to generate praises for the online toy category around the world.
Besides the positives, the company suffered a black eye after it failed to deliver number of orders in time for the Christmas 1999. This resulted many wary customers for not using the site again and ruined the first impressions for new customers during that holiday season. Then eToys was put into danger after Toys``R``Us and Amazon.com formed a partership in August 2000, a major competitive blow to eToys towards the 2000 shopping season.
In effort to avoid the shipping of 1999, it spent a lot to built two huge warehouses to handle its inventories and deliveries. Having running out of money and other funding options exhausted. Later on, in March 2001 eToys filed for a bankruptcy and sold its Babycenter and Parentcenter units to Johnson & Johnson for about $10 million. In the following months, it sold its inventories worth $5.4 million to KB Toys. KB Toys also bought its trade name, logos, trademarks and URL’s for $3.35 million.
The reasons eToys failed are similar to those of the other online retailers who own plans for world domination. eToys is also an immediate need for a large infrastructure and plenty of cash to support the untested business model.
“The bottom line is that eToys had the potential to be a great $500 million company but it was masquerading as a $5 billion company," Phil Polishook, vice president of marketing at eToys, tells The Standard. "I think that overall it was a well-run company, but in hindsight it built too big an infrastructure and spent too much money to quickly. Had the company grown more slowly, perhaps it could have survived the market downturn and grown into a nice $300 to $500 million company.”
The company was reborn in October 2001 as a subsidiary of the KB Toys. However in 2004, it was separated from KB Toys, and then owned and operated by The Parent Company.
eToys had a successful IPO on May 20th, 1999. The offer price was at $20 and it closed at $76 on the opening day which helped to generate praises for the online toy category around the world.
Besides the positives, the company suffered a black eye after it failed to deliver number of orders in time for the Christmas 1999. This resulted many wary customers for not using the site again and ruined the first impressions for new customers during that holiday season. Then eToys was put into danger after Toys``R``Us and Amazon.com formed a partership in August 2000, a major competitive blow to eToys towards the 2000 shopping season.
In effort to avoid the shipping of 1999, it spent a lot to built two huge warehouses to handle its inventories and deliveries. Having running out of money and other funding options exhausted. Later on, in March 2001 eToys filed for a bankruptcy and sold its Babycenter and Parentcenter units to Johnson & Johnson for about $10 million. In the following months, it sold its inventories worth $5.4 million to KB Toys. KB Toys also bought its trade name, logos, trademarks and URL’s for $3.35 million.
The reasons eToys failed are similar to those of the other online retailers who own plans for world domination. eToys is also an immediate need for a large infrastructure and plenty of cash to support the untested business model.
“The bottom line is that eToys had the potential to be a great $500 million company but it was masquerading as a $5 billion company," Phil Polishook, vice president of marketing at eToys, tells The Standard. "I think that overall it was a well-run company, but in hindsight it built too big an infrastructure and spent too much money to quickly. Had the company grown more slowly, perhaps it could have survived the market downturn and grown into a nice $300 to $500 million company.”
The company was reborn in October 2001 as a subsidiary of the KB Toys. However in 2004, it was separated from KB Toys, and then owned and operated by The Parent Company.
References:
Prepared by: CHOI LAI YEET
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