An example of an E-commerce failure and its causes

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 be successful.

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

Therefore we will discuss these dot.com failures for the purpose of learning how they made "serious" mistakes. Dot.com failures have become so common in 2001 and 2002 that there are a number of websites devoted to listing them and listing links to media sites that carry that story. One of the examples of dot.com failures is Nikolai.com.

The company was formed by a 41 year old women name Isabel Hoffman. She is also the founder, chief executive officer and president of Nikolai.com. The company was a network of children focused web sites that included an online store Toyboutique.com, educational site and entertainment. It had attracted 500,000 visitors a month before shutting down.

Isabel Hoffman, creator of the children websites, has been forced to shut her business because on the day the site was formed, the founder, Isabel Hoffman, posted a bit of a rant about how people don't care about their children and etc. Her main point is that she (an independent content creator) could not get the big buyers to buy into her plans. Therefore she had no "buyer" for what she was producing.

Another factor that contributed to the failure of Nikolai.com is that the company was facing financial problem. The company had a market value of $75 million and employed more than 125 employees and was offering themselves for an initial public offering. However, the market changes very quickly and financial support for dot com became increasingly insufficient and the company was forced to restructure itself for several times over the past few years to cut costs. The company is also expecting $300,000 in tax credits from the local government that would keep the company floating for another 6 months.

You may click on the website and read more story about why the company failed.

1. http://www.witiger.com/ecommerce/nikolai1b.jpg

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