Background
Pets.com is among many other online retailers that failed as a business-to-consumer e-commerce entity. Pets.com was a San Francisco-based e-tailer existing only as a virtual firm that offered pet products, information, and resources to consumers. The site was launched in November 1998, about the same time as several other online firms offering pet products. Jeff Bezos, Amazon’s CEO, took the opportunity in his effort to move from books, videos, and CDs into offering consumers “anything they might want to find online.” Along with Amazon, blue-chip venture capitalists Hummer Winblad Partners, Bowman Capital, and Catalyst Investments LLC raised nearly $110 million in four rounds of private-placement funding by December 1999. This capital allowed Pets.com to invest in the necessary hardware and human resources to run an authentic e-commerce site. Amazon’s stake in Pets.com directly challenged the leaders in the brick-and-mortar retail pet industry (those with physical stores). Petstore.com, Petopia.com, Petsmart.com, and PetPlanet.com were a few of the major competitors in the online pet industry, although Pets.com had a first-mover advantage being the first of these virtual pet stores to enter the market. In this highly competitive market, Pets.com executives took several strategic initiatives to stand out. First, it strived to offer a huge variety of products for cats, dogs, ferrets, fish, reptiles, and small animals; in fact, it listed more stock-keeping units (SKUs) than any other online pet supplier. It was the only one of the online pet product sites to have separate offerings for ferrets, the third most popular companion mammal in America. It also offered editorial advice from veterinarians, animal lawyers, breeders, scientists, and pet experts. The advice and information were updated and added on a weekly basis. The masses of information were efficiently managed and made accessible through the “Ask-o-Matic” intelligent search engine. Pets.com also extended its brand offline to the Pets.com print magazine, which dramatically increased its customer base to over a quarter of a million people. Despite these bold moves and strategic actions, the road to pet paradise was rocky. Initially, Pets.com only had one distribution warehouse in California and offered a guaranteed $4.95 shipping to anywhere in the United States. Unfortunately, every shipment to the East Coast cost more than $4.95 and therefore shipped at a loss. The firm finally opened a warehouse near Indianapolis, Indiana, and began planning further distribution centres in strategic geographic locations. Shipping prices, although still low, were adjusted to reflect actual costs better. Many customers were lured to the site by big sales, online coupons, and deep discounts. This action had the effect of slashing razor-thin profit levels –less than 2 percent, and as a result, some shipments went out below cost once again. And although Pets.com won numerous awards for best online pet site and best e-tailer in order fulfilment, it got less visitor traffic than Petsmart.com. As a result, investors and consumers began betting on clicks-and-bricks (firms with both an online and physical store presence), rather than clicks-only, as the winning formula.
Problem Statement
- What is the product here? What is the value here?
- Which type of innovation would help Pets.com to increase its sales and brand identity?
- Perform a brief SWOT analysis.
- If you were the product manager at Pets.com when the company was deciding not to enter the online markets:
- What would the product team look like?
- What would the product portfolio look like?
References
- https://www.investopedia.com/ask/answers/08/dotcom-pets-dot-com.asp
- https://www.prweek.com/article/1238980/internet-pr-petscom-downfall
- https://www.failory.com/amazon/pets-com
Instructions for submission
- All submissions should be converted into .pdf format and any of MS format (.pptx or .docx) can be used
- Deadline for submission is 24 hours prior to the mentor-led intervention on Sunday
- The individual submissions cannot be discussed with any cohort participant
- Showcase creativity and originality