updated 2014 Jan 27

for students of Prof. W.Tim G. Richardson this unit is in the text
"Current Issues in Marketing in the Information Age, 2nd. Edition"
on page
71 - 78
. This Unit used in the courses
MRK 410
MRK 610
BCS 555
MGS 523
IEC 702
MGD 415
CCT 322
. Dot. Com Failures, an overview

A summary of this unit on failures was videoed January 2009 and posted on YouTube.

click on the screen capture to the left to view the clip

hh Dot. Com Failures, response by student

student Natalia W. in MGD415 at University of Toronto, Mississauga campus in March 2011 created this video in response to the Jan 2009 video above


INTRODUCTION . In a situation where you are teaching people to learn about a subject, it is always helpful to discuss examples of activities (or companies) that are successful since this can be a way to bring out the important points of what you need to do to similarly be successful.

On the opposite side, it is also considered fruitful to discuss examples of activities (or companies) that are NOT successful since this can be a way to show how to avoid the mistakes they made.

In early 2001  the online community has sobered up from the frenzy of adulation and compliments in 1998 and 1999. Many people these days [2007] are discussing the dot.coms that didn't make it and pointing out their specific failures as a way to avoid being caught in that similar situation.

Therefore  we will discuss some of these failures for the purpose of learning how they made "fatal" mistakes.

Did they ignore one of the important 4 P's ?

  • product
  • price 
  • promotion
  • place
Where they ignorant of a critical factor in the influencing environments ?
  • technological environment
  • competitive environment
  • social / cultural environment
  • political / legal / regulatory environment
  • economic environment
  • geographical environment
POINTS failures have become so common  that there are a number of websites devoted to listing them, and listing links to media sites that carry the story. Student Tasha Pinkerton in BCS 555 found which carries a number of bust stories. The story we profile below comes from this list at 

this story, based on a report by research firm VentureOne. was widely carried
Many companies in 1997-1999 received financing from Venture Capitalists (AKA Angels). By 2000, it became apparent that expectations were not going to be met in many businesses. When some of these companies went for second round financing in 2000 and 2001, the Venture Capitalists were more hesitant and as a result many companies did not obtain financing at a critical time.

Dot.Com failures - examples
Feb 2001 story in Toronto Star

The company was a network of children focused web sites that included an online store, educational site and entertainment.

It had attracted 500,000 visitors a month

The day that the site folded, the founder, Isabel Hoffman, posted a bit of a rant about how people don't care about children etc., 

Her main point is that she (an independent content creator) could not get the big players to buy into her plans - therefore she had no "buyer" for what she was producing.

You may click on the screen capture to the left and read the story about why the company failed.

"Egghead to file for bankruptcy "
By Troy Wolverton , Staff Writer, CNET
August 15, 2001, 4:40 PM PT (link still works in 2006)
Dot.Com failures - examples."E-tail pioneer is filing for bankruptcy protection and is selling its assets to retail chain Fry's Electronics, Egghead announced Wednesday [Aug 2001]. 

Example of a large sized company that failed - (but not completely since some business taken up by a larger more stable company)

"Egghead failed to release their website until early 2000 when the boom had already been under way for some time. The only thing that their website offered at this time was high speed internet access...  visitors to the website got very frustrated because Egghead didn't offer any of their products on-line nor could an existing customer inquire whether a certain product was available or not. Customers became very frustrated, sales were very low because of their lack of product offering." 

contributed by student Sandra W., BCS 555 Oct 2002, Seneca

when you type in in Oct 2002, the site does not come up, instead you are automatically directed to
Dot.Com failures - examples - the Search Engine business June 2001 story in Business Week by Ben Elgin was in serious trouble in 2001 and 2002 because it ignored the

  • Economic Environment
    • they charged too much and lost ad revenue
  • Competitive Environment
    • they misjudged the impact of the entrance of Google into the market
  • Technological Environment
    • some say they were not using the most advanced algorithm as upstart Google


Business week notes "Yahoo's problems can't be fixed by a little cost-snipping and an upsurge in the economy. Its reliance on advertising revenues has turned into a liability as dot-com advertisers die off like mayflies and corporate advertisers  pony up 50% less for online ads than they did a year ago. Meanwhile, AOL Time Warner boasts a $221 billion market cap and controls a vast empire of  online properties, magazines, movie studios, and book publishers. Its  advertising and commerce revenues rose 10% last quarter."

"How could things like this happen? Call it the arrogance of success....  The company made no special effort to make traditional advertisers see the value of creating a presence online. It was accustomed to getting the rates it   asked for...". "Yahoo salespeople started noticing that advertisers weren't willing to pay the same rates for banner ads....Ad sales dropped ...."

from a story written by Benny Evangelista, Chronicle Staff Writer, San Francisco Chronicle
This site was found by UTM student  Jassi. B. 
in MGD415 in  Jan 2007
Jassi emailed Jan 29th to say
"Hello Professor, here is a great example of a failure....  Musicmaker was an online site, which offered music to be shared by users at a price.  You had to pay for a song in order to download it. This site only lasted for a bit, it soon had to be suspended service in January [2001] because it was unable to compete with free online music trading services such as Napster when Napster was available without charge.  I think the site failed since there were other online sites offering the same service as Musicmaker without a price tag.  The service from Musicmaker came too late, customers could get the same service at a cheaper price, and there ain't anything cheaper than free.  The article also offers  a list of other online music services which had to be shut down because of increased competition and cheaper price offerings."
this was the URL
from a story posted by "Megaton" at
This site was found by UTM student  Hina A. 
in MGD415 in  Jan 2007
Hina emailed Jan 30th to say
"Hi Prof Richardson,
I found an example of a failure of a company called Lik Lik Sang is a gaming retailer from Hong Kong which was forced to close down due to various legal actions brought against it by Sony. According to Sony, Lik Sang was liable for infringement of its trademarks, copyright and registered design rights by selling PS2 consoles from Asia to Europe. Recently, there sales of PSP consoles was rendered unlawful by high court of London. I thought I would share this example with you.."
this was the URL
this link was active in October 2005 "Top 10 dot-com flops"
This article appeared online in msn Tech ? Gadgets section -  written by Kent German
This good site
was found by 
BCS 555 
Judy P.
in October 2005
# 1 (1999-2001)
# 2 (2000)
# 3 (1998-2001)
# 4 (1998-2001)
# 5 (1997-2001)
# 6 (1998-2000)
# 7 (1999-2000)
# 8 (1998-2001)
# 9 (1999-2000)
# 10 (1999-2000)
German explains in the MSN article
"The most astounding thing about the dot-com boom was the obscene amount of money that was spent. Zealous venture capitalists fell over themselves to invest millions in Internet start-ups; dot-coms blew millions on spectacular marketing campaigns; new college graduates became instant millionaires (albeit on paper) and rushed out to spend it; and companies with unproven business models executed massive IPOs with sky-high stock prices."
BOO.COM fails Victor L, UTM student in MGD415 in Feb 2009 sent an email saying "I was reading the Failures section on the class website. I notice someone listed as one of the famous Dotcom failures, but they did not explain in great details "why". I would like to explain the causes of why failed and I think it a story to teach students in general why most Dot.coms fail."

Vic's pic
Victor explains, " was established in 1998 and was founded by three Swedish entrepreneurs: Ernst Malmsten, Kajsa Leander, and Pattrik Hedelin. intention was to sell branded fashion apparel over the internet. The website provided customers with a shopping assistant “Miss. Boo”. However, Miss. Boo failed to assist customers with the purchasing experience. essentially failed because they did not carefully plan their business by considering the 4 P’s (Price, Product, Place. Promotion) and the environmental factors (Social, Technological, Economic, Political, Geography) that might impact their overall success. 
Victor added that in his opinion " failed because they tried to do too much without careful planning. For example, established many online shops in many countries without considering the internet capability of the low developed countries. At that time, about 20% of home users used dial-up internet which did not allow them to access at a fast rate. believes that their business would have succeeded if the internet revolution would have occurred faster, it was just bad timing for I have listed several causes of why Fails."
BOO.COM fails Victor suggests, that in his opinion, these are Causes of why failed
  • Speed - very slow to load pages ( relied heavily on JavaScript and flash technology. At that time many people used dial up internet)
  • Poor web design and usability (difficult to get where visitor want to go)
  • They had a policy of “limiting the amount of transaction they made to three per twenty minute” which will discourage customer to shop at again.
  • They did not manage their capital effectively (they spend 125 million in just 6 month to market itself globally but had issues with different language, prices, and tax)
  • The company decide to pay postage on return items from customers
BOO.COM fails Steps that could of save
  • Build long-term relationship with customers
  • Design website with simplicity and great usability
  • Have an effective plans and always consider the environmental factors and the 4 P’s
  • Don’t focus too much on E-Commerce. Customer still needs face-to-face interactions.
  • Manage capitals more effectively
BOO.COM fails Victor concluded by saying
"Even though failed, one good thing that come out of it is that many online companies has learn from mistakes and able to avoid it in the future. A great example is the re-launch of “Ultimate Online Destination for Travel”.

References used by Victor
Wray, Richard. " spent fast and died young but its legacy shaped internet retailing." spent fast and died young but its legacy shaped internet retailing. 16 May 2005. 3 Feb. 2009 <>

GARDEN.COM fails Sidra K., UTM student in MGD415 in Jan 2007 sent an email saying "I was looking for some other examples of failures that you  haven't mentioned in class or on your website and I came across the  failure of a retailer known as"
Sidra explains, "The company was founded in  1995 and went out of business nearly five years later. Prior to the  shutdown, the company had no choice but to consider 30% lay off of its  workforce to reduce the burden. Nothing worked and therefore, with a  net loss of 9.9million, the company had to shut down. The company did  whatever it could to rebuild their stockholder value and to somehow  still keep up and running, but without a surprise, they  ended up failing miserably.

In a statement, said: 'In short, the company has been  unable to raise the additional funding necessary to finance the  company's growth moving forward, and our Board of Directors' was  forced to make the difficult decision to begin an orderly, staged  shut-down of's consumer business.' (obtained from"

15 Legendary Marketing Fails" 
written by Stephanie Grieser
This good site 
was found by 
Menal K.
in Jan 2014

In this article, which appeared online in PROFITguide magazine, May 2001, U.S. tech writer Ann Sullivan polled the experts to suggest seven classic errors behind 2000's dot-com disasters.

some of the points in Sullivan's list are used in our compilation below

. "The 12 Failures of Web Marketing"
This article appeared online in, July 2000, written by Tracy Emerick (link still works in 2006)
This good site 
was found by 
BCS 555 
Haya F. 
in October 2005

Failures of Web Marketing
- a combination of points in Emerick's list (found by student Haya) and Sullivan's article
1. Customer service meltdown: Neglecting service is always a license to lose customers. One Internet research firm that  measured customer service at 79 online sites found 30% of  customer service e-mails went unanswered, and only 40%
2. Doing the same thing - Companies that do not make fundamental changes to their corporate goal, and objectives and simply operate according to business as usual, after they begin e-commerce, are going to put themselves in a bad situation when the changes that e-commerce creates begin to effect the company.
3. Inadequate order fulfillment: Too many companies still don't have stock on hand or readily available to meet  customer orders — leaving customers in limbo or the lurch.
4. Use of primitive search and transaction tools: Many   websites make consumers wait too long or take too many  steps to find what they're looking for.
5. Failure to globalize: Many U.S. websites neglected potential customers in other countries. Market-research firm  IDC says this is the year [2001] that international surfers will outspend U.S. online shoppers.
6. Building community, not clientele: Too many dot-coms have emphasized building a community instead of clientele.
7. Insufficient budgets: Memo to the accounting department:  deploying a website is just the beginning of a company's e-commerce expenditures. Many companies underbudget their needs in website maintenance and marketing. Emerick says "As savings are realized and revenues generated, the Internet must have additional funding from these successes or it will fall behind waiting for the next budget cycle."
8. Channel conflict: Many companies leap into Internet sales  without considering the impact on their channel partners, such as dealers or retailers. The resulting chill has set back many e-commerce initiatives.
9. HR problems - need a senior executive - if you want the "e" side of your business to have influence over the company's direction, you need to create a senior staff position for an executive that has authority and can do things corporately, internally and externally, on behalf of the people trying to develop the e-objectives
10. HR problems - compensation - if you start to have company executives bringing in money based on the e-commerce side of the business, you have to make sure you reward them with bonuses or increased pay in proportion to the $$$ they are creating in revenue.
11. Innovation - the intensity of the competitive environment and the continued developments in the technological environment require that a company constantly search for innovative ways to produce and dispense the product and deal with customers
12. Customers to Ambassadors - mass advertising turns people off - if they like your product, they will tell other people - this is desirable. If you can use internet structures and great customer service to turn customers into ambassadors of your product, you will be, in effect, increasing your sales force.

permission to quote from PROFITguide magazine given by Editor Ian Portsmouth by email 2004 Dec 07.
Copy of email kept on file in permissions binder.
. "Why have so many dot coms failed dramatically" 

added 2014 Jan 27

congtains a long list of "teachable points"

c  a U.K. based site which discusses mostly companies in England
includes list of failed companies is a commentary site backed by Bathwick Research and its investment research team
(in 2006 it is no longer an active site but has morphed into a portal with misc. links)
The IBL includes six subject areas related to large-scale business restructurings targeted to the bankruptcy professional seeking information on the Internet. The IBL currently receives thousands of hits each day. The IBL is cited as a resource link from dozens of Web sites and has been featured as a valuable Internet information resource in scores of directories, newspapers, magazines and trade journals. 
.there is no website here, but the name is taken !