What’s in a Dot-Com Name?

Furniture.com. Garden.com. Mortgage.com. Pets.com. If any four e-tailers had reason to believe they could succeed by name alone, these four did.

Instead, within a 16-day span, all four companies announced they were shutting down operations. The closures came during the past three months, when dozens of dot-coms, including other higher profile companies, folded almost on a daily basis.

The momentum of the dot-com shakeout has debunked many assumptions about doing business online. If nothing else, the failures of the four generically named companies have helped do away with another supposed axiom — that in a given sector, there has to be at least one success.

“We went through a period two years ago where the generic strategy was, ‘We’re gonna be the Amazon of X,'” IDC analyst Barry Parr told the E-Commerce Times. “Just because X exists doesn’t mean there will be an Amazon for it. That’s a pretty profound change in the way we think about online commerce.”

Growing List

According to a study by Webmergers, through mid-November, 131 dot-coms had foundered this year. Of those, nearly one third had closed from October on.

Among the more renowned dot-com endeavors shutting down in the past three months were WebHouse Club, a licensee of Priceline, and two health-and-beauty e-tailers: MotherNature.com and Eve.com.

In the case of the generically named companies, closure seemed to come with the rat-a-tat-tat of a machine gun. On Halloween, Mortgage.com announced it was winding down operations. A week later, Furniture.com followed suit. The next day, Pets.com forfeited its leash on life. On November 15th, Garden.com made its closure statement.

Besides their names, the four deceased dot-coms — particularly Garden.com, Furniture.com and Pets.com — had other similarities.

All Kinds of Assets

The companies had budding popularity. Approximately 1 million unique users visited Furniture.com in September, the company said. Garden.com claimed more than one million registered members, who could choose from more than 20,000 products from over 60 suppliers. Pets.com reportedly attracted over 570,000 customers.

They had significant capital investment. Garden.com had an initial public offering (IPO) in September 1999, raising US$49.2 million. Earlier this year, Net incubator CMGI gave Furniture.com a $27 million boost. Pets.com raised over $82 million in an IPO, took on Amazon as a majority shareholder, and fostered perhaps its biggest asset — the Sock Puppet marketing sensation.

Also, they had shaky competition. Furniture sites UrbanDesign Online, HopePortfolio.com and Amazon-backed Living.com all have closed. Pets.com acquired Petstore.com in June, while Petopia laid off more than half its employees in October, then was bought by offline retailer Petco.

In the end, none of it mattered. Their business models failing them, four companies positioned as industry leaders had come to the same grim end as ObscureSite.com.

Hindsight to the Blind

According to Parr, the failure of Pets.com, Mortgage.com, Garden.com and Furniture.com should not be interpreted to mean that there was no potential for success at all.

“Certainly in 20-20 hindsight you can say, ‘What were these people thinking — this was a stupid idea,'” Parr said. “Two years ago, it was a little less obvious. It was probably a risk worth taking — you could make a plausible argument for it.”

On the other hand, Parr, who himself was once a vice president for CNET, which holds the News.com address, thought that the generic names might have created more problems than benefits.

“I don’t think there was any doubt there was confusion,” Parr said. “Having been on the position of doing marketing on a generically named company, it’s really hard to establish brand and idenity for a company that has a generic name.”

Looking Ahead

Though the fate of the four generically named companies may not reveal whether the pace of dot-com closures will accelerate in 2001, it does give one pause before banking on the success of a given company, no matter how much it looks like a winner.

“Every market is unique, but on the other hand, it’s also nave to think that you’re special,” Parr said. “You can’t necessarily draw a conclusion that in certain markets, there won’t be a dominant player that is a dot-com. Having said that, we can’t ignore what’s happened and we’ve sort of reached the stage to say dot-coms will not be winners [in some markets].”

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