Pets.com died a miserable death just 10 years ago this week. Back in 1999, Pets.com was one of the hallmarks of the dot-com era and its death signified the dot-com crash. The Macy’s Day Parade and Superbowl featured the Pets.com dog and People, Good Morning America, Regis & Kathy Lee and other outlets interviewed the sock puppet dog. The company launched in August 1998, got bought out, secured venture capital, IPO’d on Nasdaq, and liquidated by November 2000. Boo-ya!
In 1999, revenues hit about $600,000. But the company spent $11.8 million on advertising. Apparently, the Superbowl ad alone cost over $1 million. Ouch. Wikipedia has more….
Pets.com entered an established market with traditional mark-ups of two to four percent. Cans and bags of dog food tend to be pretty heavy, so you can imagine the shipping costs. And one has to wonder whether people make the same impulse buys for their pets when they shop online as they do in a store.
Online pet shopping may have also missed the mark with the lack of community. Many pet owners trudge down to their local pet store so that they can chat with the shop owner, show off their pet, hang out with other customers, find out about local dog parks, and, heck, even advertise their dog wedding or pet-friendly apartment rental. While it’s certainly possible to manage those sorts of social interactions in today’s online space, the 1999-2000 web lacked the depth of today’s online communities. The world just wasn’t ready for Pets.com.
Of course, blowing 24x your earnings on marketing may not have helped much. Although I agree with PT Barnum’s take on marketing, you still need to do your due diligence and weigh up your options. And find clients with the money to sustain your business.