.PNG)
Many newly formed DotCom companies around the world failed in year 2000. This is because the market with similar products or services has created intense competition among themselves. The causes of failure can be separated into controllable and uncontrollable causes. The controllable causes can be further divided into strategic, operational and technical causes while uncontrollable can be divided into technical and behavioral causes.
Furniture.com is one of the example of an E-commerce failure. It was a company that sold furniture and other household amenities online. Under controllable causes, Furniture.com failed to make the optimum decision as the entrepreneurs lacked a clear understanding of business fundamental in the areas of finance, marketing, distribution, inventory and other. As a result, Furniture.com had insufficient back-end operations to support front-end demands.
Beside that, Furniture.com was wrongly focused on spending pattern to support or initiate high growth. Thus, they had overspent on marketing and IT infrastructure in an attempt to grow quickly. As the result, it did not pay proper attention to the product differentiation, product quality and back-end infrastructure to support front-end sales and after-sales services. Finally, it suffers a huge loss. For example, according to Securities and Exchange Commission documents filed by Furniture.com, the company generated revenue of $10.9 million in 1999 but loss $46 million because it spent $33.9 million on sales and marketing which was three times the cost of product development, general and administrative expenses combined.
Then, delivery system in Furniture.com is slow. This is under operational cause which the business mainly closed due to its logistics problems. In addition, it often sent the wrong products which resulted in paying extra cost for pick-ups, refunds and reordering. Furthermore, Furniture.com often do not turn up their promised. Hence, shoppers felt irritating and turning them away from the company’s business.
Other than that, server down is the technical cause that makes Furniture.com failed. The web servers often run with interruption. Long server down time in Furniture.com cause the customers quickly lose their interest when they visit the website.
As the result, an E-commerce company must be aware of their delivery and server services. Then, the entrepeneur should have the fundamental knowledge of business in order to manage the company well and sustain in the E-commerce.
Furniture.com is one of the example of an E-commerce failure. It was a company that sold furniture and other household amenities online. Under controllable causes, Furniture.com failed to make the optimum decision as the entrepreneurs lacked a clear understanding of business fundamental in the areas of finance, marketing, distribution, inventory and other. As a result, Furniture.com had insufficient back-end operations to support front-end demands.
Beside that, Furniture.com was wrongly focused on spending pattern to support or initiate high growth. Thus, they had overspent on marketing and IT infrastructure in an attempt to grow quickly. As the result, it did not pay proper attention to the product differentiation, product quality and back-end infrastructure to support front-end sales and after-sales services. Finally, it suffers a huge loss. For example, according to Securities and Exchange Commission documents filed by Furniture.com, the company generated revenue of $10.9 million in 1999 but loss $46 million because it spent $33.9 million on sales and marketing which was three times the cost of product development, general and administrative expenses combined.
Then, delivery system in Furniture.com is slow. This is under operational cause which the business mainly closed due to its logistics problems. In addition, it often sent the wrong products which resulted in paying extra cost for pick-ups, refunds and reordering. Furthermore, Furniture.com often do not turn up their promised. Hence, shoppers felt irritating and turning them away from the company’s business.
Other than that, server down is the technical cause that makes Furniture.com failed. The web servers often run with interruption. Long server down time in Furniture.com cause the customers quickly lose their interest when they visit the website.
As the result, an E-commerce company must be aware of their delivery and server services. Then, the entrepeneur should have the fundamental knowledge of business in order to manage the company well and sustain in the E-commerce.
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