E-Biz Shakeout Takes No Prisoners, Big or Small

It has been argued, possibly even by this columnist, that the e-commerce companies that stayed small and lean had a better chance of surviving the ongoing shakeout.

But there is growing evidence that it just doesn’t matter how big or small you are. Or even, for that matter, how early on you got into the e-business game. Fact is that smaller dot-coms are getting wiped out. The only difference is, they're just not grabbing headlines on the way down like eToys, Pets.com, Boo.com ... well, you get the idea.

Last week, for instance, Boston, Massachusetts-based Brandpoint.com folded up shop. The owner put out a press release and a few local reporters wrote it up, but there was no torrent of coverage.

Still, Brandpoint flies in the face of many a dot-com shakeout story. It didn't burn through piles of IPO proceeds or even venture capital, which it never took.

Lean and Not Mean

Brandpoint ran on a skeleton crew of as few as four employees near the end. Because it was a "shopping portal" that referred visitors to merchant sites, it didn't have to deal with all that nasty and burdensome fulfillment business.

Instead, Brandpoint got shaken out because its owners, by their own admission, didn't account for a dot-com shakeout. The fact is that shoppers used the site to get to merchants. No, they didn't come in torrents, but the site regularly won plaudits from Web magazines and the like.

It was certainly simple to use. You're looking for bicycles online. Click on the picture of a bike and you've got a choice of bicycle vendors to choose from. But it wasn't nearly as simple for Brandpoint to make money on its business model, especially in the midst of an economic downturn.

Changing Times

So what kept Brandpoint alive so long? Good times, to put it bluntly. When the economy was flush, a young and eager e-tailer would pay pretty handsomely to have even a trickle of shoppers referred to their site. They'd pay even more for premier placement.

Brandpoint surely wondered, "Would there be a long-term payoff?" At the time, the answer was, "Of course." Long-term would take care of itself -- as long as you were generating customers in the present.

Every customer was thought to be as precious as a brick of gold, not only because he or she had been acquired, but because he or she had not been acquired by the competition.

So what if it cost two bricks of gold to get that one customer to buy one bicycle? Get that customer now -- and that customer would take care of you down the road.

Assets for Sale

Then it didn't turn out that way. Brandpoint's founder and original chairman, Bradford Hudson, said the firm's "business model was not sufficiently robust or sufficiently complex to survive the crisis in the dot-com world."

Hudson is now hoping to sell off some Brandpoint assets, most notably its domain name. In fact, there really isn't much else to sell. There's nothing particularly proprietary about the business model. A bunch of links is all it really is. And there were no vast inventories sitting in warehouses.

Still, Hudson should take heart as he accepts bids on what's left. Because Brandpoint's business model was so right at the time. When companies are spending billions on customer acquisition, customer referral is certainly the place to be.

The only problem is that when the bottom line bottoms out, it's a very lonely place to be.

Silence is Golden

With all the big trees crashing around him and getting all the attention, Hudson probably didn't expect anyone to notice as his company faded into the sunset. And that's a good thing. It wouldn't really be fair if a dot-com that got little attention during its glory days suddenly got the harsh spotlight as it breathed its last.

Hudson isn't talking much about what happened just yet. Instead, he's letting a press release that few people paid attention to speak for him. But it's safe to say that if he wanted to reach out, if he wanted fallen comrades in the dot-com world to commiserate with, he'd find he's far from alone.

What do you think? Let's talk about it.