Kozmo.com was one of the failure cases in the E-commerce industry and was founded in 1997 by investment bankers Joseph Park and Yong Kang with $4.5 million capital which rose from private investors.
The mainly service is delivering the goods with an attractive idea that is free of delivery charge. Customers can order wide variety products such as video, books and snack food from internet and it would be free delivered to them within one an hour even during the rainy day. It was attracted a lot of customers at that time, unfortunately, a tragedy was fall to Kozmo.com because of this attractive service provided.
Although the Kozmo.com received a lot of business, but the company was still unable to cover its expenses and costs. It was obviously showed that they can not afford the delivery cost after expanding its business to seven cities. The most significant is in year 1999, it had $3.5 million in their revenue but it faced a net loss about $26.4 million. The company tried to cover it with a charge on partly transaction, but it still unable to change the fate of the Kozmo.com. In the April of year 2001, the company ran out of its money and lay off its employees.
The main causes are the delivering fee was hard to be covered from the gain of selling the product and it was too difficult to expand its business to larger market. The analysts pointed out that the Kozmo.com must increase its customers' average orders and create an efficiency route structure that messengers can make multiple deliveries on something approaching a door-to-door basis. It is truly a loss of internet user that unable to enjoy this convenience service.
References:
http://www.cyberspacers.com/news/dot_com_flops/
http://www.cnet.com/4520-11136_1-6278387-1.html
http://www.ecommercetimes.com/story/6568.html?welcome=1213463999
http://tim.blog.kosmo.com/blog/_archives/2005/8/8/1119285.html
http://www.thestandard.com/news/2008/05/29/where-are-they-now-kozmo-com
http://news.zdnet.com/2100-9595_22-517775.html
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4 comments:
Do you think e-commerce failure is based on the immature market or actually related to the poor planning of the company which is involved in e-commerce?
In my opinion, most of the e-commerce failure is due to the poor planning of the company. Although IT bring a lot of advantages to companies, it cannot confirm your success of business. It is just a tool that help company to achieve the goal. So, whether failure or success, it is basically based on the company itself but not the tools.
I appreciate your post, thanks for sharing the post, i want to hear more about this in future.
lithoura
I appreciate your post, thanks for sharing the post, i want to hear more about this in future.
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