An example of an E-Commerce failure and its Causes

The Internet and the growth of e-commerce have had a revolutionary effect upon business whether it is dealing with other business or whether it is business selling to consumers. Business man have view that the Internet as the perfect medium for start-up venture’s investment to make a quick capital gain. There are many successful examples in E-commerce such as Amazon.com, Google.com, E-bay.com and etc. However, they are no guarantee that all companies will success in e-commerce, it may because of they are not able to face the challenges in market by the use of Internet.

EToys.com is one of the top 10 dot-com flops. EToys.com was launched in 1997, it was founded by the CEO, who name Toby Lenk, COO Frank Han and Idealab Founder Bill Gross. EToys seem like the best idea for those busy parents; it offered them a chance to order thousands of toys in every catergory from the comfort of their homes. Beside that the site also had fun features, the features including gift recommendations by age and and information about popular characters, from Madeline to Barney. Etoys also has won a praise for its site design and had technically sophisicated warehouses and fulfillment operation. In 1999 during the Christmas, EToys was suffered a black eye because it failed to deliver some order in time. The first impression for new customers was ruin because of this, and people were worry of using the site again. In August 2000, the Toys"R"Us and Amazon.com has formed a partnership, it put Etoys into risk. EToys went into liquidation in March 2001, Because run out of money and other funding options exhausted.

One of the causes of the EToys.com failure in e-commerce is because of ineffective customer service or misinformation about products and services, example like the failed to deliver the order on time would destroy the image of the company, and the first impression of new customers. Customer will not feel confidence and afraid to use the site again. However, the negative response from customers is also another cause which will lead the dot-com filed into bankruptcy in E-business. This is why the reputation of a company is very important, once it is ruined; peoples will loose the confidence in such company again. For example, if the E-business fails to deliver on time, the customer will not return and they will share with their friends about their bad experience. Third, maybe effect of the errors in the company's Web site. Sometimes hundreds of errors could be found in one Web page, this is due to peoples will be frustrated to visit or log in to the company’s Web site. Beside that, inability to define clearly and to understand the market demand, the needs of the customer, or their buying habits of the marketing strategy, if it is not immensely enough or is ineffective, is another reason for failure.

Because of the causes stated above, many dot-coms have fall into liquidation. Therefore, in order to avoid the failure of an e-commerce company, useful of business strategies, and effective, strong organisational, and customer relation policies to meet the demands of its valuable customers are the key elements of the successfulness in e-commerce.