An example of an E-commerce failure and its causes

Introduction
Many people start an ecommerce site hoping that they can be the next Amazon, but the same hopeful people often spend very little time in developing and maintaining a good and practical ecommerce site. It is not as easy as they think.

One of the examples is etoys.com. The company is a purely e-commerce toy retailer focused on the sales of children’s products. The aims are to provide a unique and fun shopping experience with the convenience of staying at home or shopping from workplace to the consumers.

Content

It has suffered greatly due to slow sales and revenue shortfall. Financial troubles that arose because of slow sales during the holiday season, it stops paying some creditors and suppliers. The continued failure in profits is forcing the company to explore new options.
There are some reasons of its failure.
Firstly, an immediate need for a large infrastructure and plenty of cash are needed in order to support an untested business model.
Secondly, built too big an infrastructure and spent too much money too quickly. In an effort to avoid the shipping missteps of 1999, the top management of the company was too fast in expanding company’s operation such as putting heavy advertising and spent a lot of money in building two warehouses in order to keep the inventories. All that spending outweighed the company's income, and investors quickly jumped ship. It closed in March 2001.
Thirdly, it has poor customer service in delivering the products to certain customers in time for Christmas 1999,. It is an important part of the e-commerce activities. It leads to the failure of the company to fulfill the specification and requirement of the customers as a whole.


Conclusion

It is a very good example for those who wish to start e-commerce. It may provide some guidelines for them and learn from others’ failure and do the better one.