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Sorting through the dot bomb rubble: how did the high-profile e-tailers fail?

International Journal of Information Management
Publication Date
DOI: 10.1016/s0268-4012(02)00104-4
  • Political Science


Abstract During the late 1990s and early into the year 2000, we witnessed the launch, rapid rise and sudden fall of a relatively new industry…e-commerce. With the widespread use of the Internet, exciting business to consumer (B2C) e-tail opportunities emerged. Sites began selling online directly to consumers, everything from books, to pet supplies, to clothing. This created a frenzy of companies trying to get online, to stake their claim, and to get a piece of the action. The hype did not last. In April 2000, a stock market correction sent prices in the high-tech sector tumbling, and prompted investors to re-evaluate, pull back funding and demand profitability. Many e-tail ventures were unable to survive in this new, harsher environment, and hundreds began to close their virtual doors. Analysts generalized that the business owners were just too young, or too inexperienced. Business models were criticized. Other theories maintained the people running the business were so intent on breaking all the rules that they failed to consider some of the traditional business success factors. Fingers pointed in all directions, to venture capitalists, to investors, and to the entrepreneurs themselves. The following research summarizes literature that seeks to explore the success and failure of traditional businesses, and applies those factors to some high profile failed e-tail businesses. The paper uses five e-tail companies,,,, and as examples of the hundreds of dot com businesses that failed. Each was a pure-play Internet business with no bricks and mortar presence. These five failures all occurred on a large scale, with the businesses burning through hundreds of millions of dollars in just a few years. Comparison against known factors of success and failure demonstrates that the e-tail businesses were victims of timing and natural industry evolution to some extent, but they also made fundamental mistakes in their attempts to grow quickly.

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