Provide an example of an E-commerce failure and its causes

According to relational report, five years since 2000 have seen an explosion of online sales activity with growth rates in almost all verticals in the fourteen to twenty percent range. However, ninety percent of all online businesses fail. Some of the industry experts claim that the reasons are at the center of much debate. Most of the explanations for why so many online businesses fail to achieve their goals are tactical and fail to address the more urgent strategic issues relative to the webs business environment.

Founder - Tony Lenk

There are three things that an e-commerce holder must take into account:

- Brick and mortar businesses are visible for all to see but on the web, your products are only as visible as the search engines say you are

- In the online world, the user or customer dictates what companies will be in there field of view based upon the keywords he or she uses

- The WWW levels the playing field, large and small companies have little differentiation.

The example of e-commerce failure that I want to provide is eToys. eToys.com is a retail website that sells toys via the internet. eToys once to be the benchmark against which all other toy sites are measured. Like so many other e-commerce businesses, the company that owned the eToys site filed for protection toward the end of the Internet bubble on March 7, 2001, and the owner Toby Lenk lay off his remaining 293 employers on April 6. In just one year, eToys went from being a perceived threat to retailing giant Toys ‘R’ Us to just another e-commerce casualty.

Many economists are blaming the failure of eToys on poor customer service and expensive advertising campaigns, both of which resulted in eToys not being able to adequately meet the needs of its customers. Marketing tactics are what helped make eToys strong, makes them became a household name for its unique, but its too pricey for them.

eToys was launched in June 1997, originally with the sole purpose of selling educational toys. In order to compete with the biggest competitor, Toys ‘R’ Us, the founder and CEO of eToys, Lenk expanded the operation. The site was highly anticipated by many marketers and economists, believing that such an expansive venture could be daring enough to work.

However, during the 1999 holiday season, eToys was accused of falling short of one of its initial goals-speedy and reliable customer service. Many customers complained that their orders were either late in arriving at their destination or contained the wrong merchandise. Besides, eToys suffered another blow in 2000 when Amazon.com agreed to team up with Toys ‘R’ Us to create an even more expansive online toy retailer. In 2000, the company fell short of its goal of earning $212 million, forced the company to lay off 700 employees in early January and shut down all but one of its warehouses. On February 5, Lenk announced that his company was filing for bankruptcy.

The website of eToys