An Example of An E-Commerce Failure And Its Causes
E-Commerce is a process of buying, selling and exchanging products, services and information via computer networks. With the tremendous growth of the internet, more and more people are purchasing their products online as it is much cheaper compare to “bricks and mortar” stores.
Example of E-commerce Failure
Example of E-commerce Failure
IBM
IBM’s World Avenue Mall is one of the casualties of online retailing. This online mall lasted less than a year in the market. It was started in 1996 and closed down in July 1997. This mall was actually using IBM’s name but it was rented out to other companies to sell their products. This sounds promising as at that time, online sales are projected to reach billions of dollars in sales. Therefore companies like IBM and Microsoft are starting it early to tap it potential and gain a strong foothold in the market. But lack of understanding of its customers and online users lead to a disaster which eventually cause the virtual mall to closed down and indirectly hurt IBM’s name.
Toysmart is a toy company that is owned 60% by Disney Corporation. This company is specialised in selling educational toys for children and learning tools which are need by most parents. During the uprising of the internet, this company’s website has been rated to be the few most visited website during the end year holidays. But in year 2000, during the dot com bubble burst, Toysmart is the second large toy company owned by big entertainment company to shut down its doors after Red Rocket which is owned by Viacom closed down.
IBM’s World Avenue Mall is one of the casualties of online retailing. This online mall lasted less than a year in the market. It was started in 1996 and closed down in July 1997. This mall was actually using IBM’s name but it was rented out to other companies to sell their products. This sounds promising as at that time, online sales are projected to reach billions of dollars in sales. Therefore companies like IBM and Microsoft are starting it early to tap it potential and gain a strong foothold in the market. But lack of understanding of its customers and online users lead to a disaster which eventually cause the virtual mall to closed down and indirectly hurt IBM’s name.
Causes
The mall is started in 1996 which at that time, internet usage among people is very low and expensive. People prefer to buy directly from traditional as they can view the actual product before purchasing it while purchasing online will depends on the picture supplied. Other than that, security at that time become an issue to the users and they are worried about their own privacy will be breached as a result of “cookies” stored on their computer by the retailers. IBM’s World Avenue Mall which uses IBM’s name also undermine the brands of their customer who uses IBM’s service. This cause uneasiness among the IBM’s client which see some of them leaving the service.
The mall is started in 1996 which at that time, internet usage among people is very low and expensive. People prefer to buy directly from traditional as they can view the actual product before purchasing it while purchasing online will depends on the picture supplied. Other than that, security at that time become an issue to the users and they are worried about their own privacy will be breached as a result of “cookies” stored on their computer by the retailers. IBM’s World Avenue Mall which uses IBM’s name also undermine the brands of their customer who uses IBM’s service. This cause uneasiness among the IBM’s client which see some of them leaving the service.
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Toysmart
Toysmart is a toy company that is owned 60% by Disney Corporation. This company is specialised in selling educational toys for children and learning tools which are need by most parents. During the uprising of the internet, this company’s website has been rated to be the few most visited website during the end year holidays. But in year 2000, during the dot com bubble burst, Toysmart is the second large toy company owned by big entertainment company to shut down its doors after Red Rocket which is owned by Viacom closed down.
Causes
Due to the massive spending during the change of year 2000 have leave many I.T company spend more than they need, causing them to spend unnecessarily. Other than that, there were too many toy companies at that time where it cause them to compete with each other but cutting down on their profit margin, making some companies having high revenue but no profits. This online toy companies also based on a theory of having to expand its customer based as fast as possible even if they incur heavy losses. The case of Toysmart is that, they fail to get necessary cash injection when ongoing talks with investors fall out in the last minute prompting the CEO, David Lord to announce that the company is closing down on May 22, Year 2000. Toysmart, also fail to build a unique brand that will attract parent to come back to its store and there is no customization available like the other competitors which make it like other ordinary “brick and mortar” toy store.
Due to the massive spending during the change of year 2000 have leave many I.T company spend more than they need, causing them to spend unnecessarily. Other than that, there were too many toy companies at that time where it cause them to compete with each other but cutting down on their profit margin, making some companies having high revenue but no profits. This online toy companies also based on a theory of having to expand its customer based as fast as possible even if they incur heavy losses. The case of Toysmart is that, they fail to get necessary cash injection when ongoing talks with investors fall out in the last minute prompting the CEO, David Lord to announce that the company is closing down on May 22, Year 2000. Toysmart, also fail to build a unique brand that will attract parent to come back to its store and there is no customization available like the other competitors which make it like other ordinary “brick and mortar” toy store.
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