Pets.com

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search

Pets.com
Nasdaq: IPET
FoundedNovember 1998; 23 years ago (1998-11)
DefunctNovember 9, 2000 (2000-11-09)
FateSelf-liquidated
HeadquartersSan Francisco, California, United States[1]
Number of employees
320
Websitewww.Pets.com at the Wayback Machine (archived March 1, 2000)

Pets.com was a dot-com enterprise headquartered in San Francisco, US that sold pet supplies to retail customers. It began operations in November 1998 and liquidated in November 2000. A high-profile marketing campaign gave it a widely recognized public presence, including an appearance in the 1999 Macy's Thanksgiving Day Parade and an advertisement in the 2000 Super Bowl. Its popular sock puppet advertising mascot was interviewed by People magazine and appeared on Good Morning America.

Although sales rose dramatically due to the attention, the company failed to become profitable and became known as one of the victims of the dot-com bubble in the 2000s.

Since 2001, the domain has redirected to PetSmart's website.

History[edit]

On November 21, 1994, the Pets.com domain name was registered by Pasadena-based entrepreneur Greg McLemore.[2][3] The Pets.com website launched in early November 1998 as a spinoff of WebMagic[4][5] and Pets.com was incorporated in February 1999.[3] After its start by Greg McLemore and Eva Woodsmall, Pets.com was purchased in early 1999 by Julie Wainwright.[5][6] Amazon.com was involved in Pets.com's first round of venture funding, purchasing a majority 54% stake in the company.[7] Amazon, along with Hummer Winblad Venture Partners and Bowman Capital Management invested $10.5 million into Pets.com in March 1999.[8][9] The CEO of Pets.com, Julie Wainwright, said of Amazon's investment, "This is a marriage made in heaven".[7] By October 2000, Amazon had a 30% stake in the company.[10] Pets.com spent most of the venture funding on large warehouses and other shipment infrastructures, as well as purchasing their biggest online competitor at the time, Petstore.com in June 2000 for $10.6 million.[11][12]

A regional advertising campaign using a variety of media began, which included television, radio, print, outdoor advertising and a Pets.com magazine, which had its first issue published in November 1999. The first issue was sent to 1 million pet owners in the United States during the month it was first published.[13][14][15][16] Pets.com started with a five-city advertising campaign, which was expanded to 10 cities by Christmas 1999.[citation needed] The company succeeded in making its mascot, the Pets.com sock puppet, well known.[17][18] The Pets.com site design was extremely well-received, garnering several advertising awards.[citation needed] In January 2000, the company aired its first national commercial as a Super Bowl ad which cost the company $1.2 million.[19] That ad was ranked #5 by USA Today's Ad Meter.[20] The company went public on the NASDAQ stock exchange in February 2000 and raised $82.5 million; the former Nasdaq stock symbol was IPET.[21][12]

Despite its success in building brand recognition, it was uncertain whether a substantial market niche existed for Pets.com.[22] No independent market research preceded the launch of Pets.com.[22] During its first fiscal year (February to September 1999) Pets.com earned $619,000 in revenue, and spent $11.8 million on advertising.[22] Pets.com lacked a workable business plan and lost money on nearly every sale because, even before the cost of advertising, it was selling merchandise for approximately one-third the price it paid to obtain the products.[22] Pets.com tried to build a customer base by offering discounts and free shipping, but it was impossible to turn a profit while absorbing the costs of shipping for heavy bags of cat litter and cans of pet food within a business field whose conventional profit margins are only two to four percent.[22][23] The company hoped to shift customers into higher-margin purchases, but customer purchasing patterns failed to change and during its second fiscal year the company continued to sell merchandise for approximately 27% less than cost, so the dramatic rise in sales during Pets.com's second fiscal year only hastened the firm's demise.[22]

In September 2000, Pets.com opened a new customer service call center in Greenwood, Indiana and relocated the majority of its customer work force to Indiana in order to cut costs.[24] They aggressively undertook actions to sell the company. PetSmart offered less than the net cash value of the company, and Pets.com's board turned down that offer.[citation needed] The company announced on November 7, 2000[25] that they would cease taking orders on November 9, 2000 at 11am PST and laid off 255 of their 320 employees.[26][27] Pets.com had around 570,000 customers before its shutdown.[28] Pets.com stock had fallen from its IPO price of $11 per share in February 2000[21] to $0.19 the day of its liquidation announcement.[citation needed] At its peak, the company had 320 employees,[29] of which 250 were employed in the warehouses across the United States. While the offer from PetSmart was declined, some assets of Pets.com, including its domains, trademarks and subsidiaries such as Flying Fish Express, were sold to PetSmart in December 2000.[30][31][32] As of 2022, the Pets.com domain redirects to PetSmart.com.[33]

Wainwright and nine other executives stayed during the liquidation and held a stockholders' meeting on January 16, 2001 to finalize the liquidation.[34] Wainwright received $235,000 in severance on top of a $225,000 "retention payment" while overseeing the closure.[34] The company changed its name to IPET Holdings, Inc. on January 16, 2001 and liquidation of the company was completed on January 18.[35]

Charity work[edit]

During the company's existence, Pets.com partnered with Best Friends Animal Sanctuary to start a charity called "Pets.commitment", which provided funding and support for animal shelters, animal therapy, service dog programs, pet care and wellness organizations. The charity's motto was "people helping animals, animals helping people."[36] After the Pets.com website closed in November 2000, Pets.com donated more than 21 tons of dog food to help Mushers in Alaska's Interior in December 2000.[37]

Sock puppet[edit]

The Pets.com sock puppet

Pets.com hired the San Francisco office of TBWA\Chiat\Day to design its advertising campaign. The firm had recently created the popular Taco Bell chihuahua. For Pets.com, they designed a doglike sock puppet that carried a microphone in its paw.[22] The puppet, performed by Michael Ian Black (an alumnus of MTV's surrealist comedy sketch show The State), was a simple sock puppet with button eyes, flailing arms, a watch for a collar, and a stick microphone emblazoned with "pets.com".[22][38] The sock puppet first appeared in Pets.com's advertising in August 1999.[39]

As the puppet's fame grew through 1999 and 2000, it gained almost cult status and widespread popularity. The puppet made an appearance on ABC's Good Morning America and Nightline, WABC-TV-produced Live with Regis and Kathie Lee, was interviewed in People Magazine, Time Magazine, Entertainment Weekly and Adweek and even had a 36-foot-tall (11 m) "falloon" made in its image for the 1999 Macy's Thanksgiving Day Parade.[43] In addition to the media appearances the Pets.com puppet made, merchandising was also done for the company including clothing, other trinkets, and a retail version of the sock puppet that delivered some of the puppet's famous lines, which started shipping on June 13, 2000.[44][45] More than 10,000 puppets had been sold in its first week of availability and more than 35,000 puppets had been sold by late-July 2000.[46] The Pets.com sock puppet toy was available until the website's shutdown.[47] The Pets.com sock puppet also had an “autobiography” of himself titled "Me by Me", which was released in 2000, a coffee table book featuring a compilation of photos with quotes.[48][49][50]

After Pets.com liquidated, Hakan and Associates and Bar None, Inc. purchased the rights to the puppet under a joint venture called Sock Puppet LLC for $125,000 in 2002.[22][51][52] Bar None, Inc., an American automotive loan firm, gave the puppet a new slogan: "Everyone deserves a second chance." and aired nine commercials featuring the puppet in July 2002.[53][54]

Lawsuit[edit]

As Pets.com's recognition began to grow, it attracted the attention of the creators of Triumph the Insult Comic Dog. Representatives from Robert Smigel sent letters, including a cease and desist demand, to Pets.com claiming that the puppet was based on Triumph. Pets.com responded by suing Smigel in the U.S. District Court in San Francisco in April 2000, demanding $20 million in damages for defamation and trade libel.[55][56][57][58]

Wainwright responded to the lawsuit, saying that "We were surprised when we received the letter because there is obviously no relation between the Pets.com Sock Puppet and Triumph".[59] Canadian sock puppet character Ed the Sock, who had previously accused Smigel of basing his Triumph character on himself, also used the incident for publicity.

The lawsuit was dismissed in February 2001 by Judge Charles R. Breyer.[60]

Legacy[edit]

The publicity surrounding the Pets.com puppet, combined with the company's collapse, made it such a symbol of dot-com folly that E-Trade referred to it in an advertisement during the 2001 Super Bowl. The commercial, which parodies the famous crying Native public service advertisement from 1971, shows a chimpanzee riding on horseback through a ruined dot-com landscape. The chimpanzee comes across a company named "eSocks.com" that is being demolished and weeps when a discarded sock puppet lands at his feet.[15][61][62]

In June 2008, CNET named Pets.com as one of the greatest dot-com disasters.[63]

Pets.com's concept was successfully realized by Chewy.com, prompting comparison between the two companies by analysts after Chewy held their IPO in 2019. Chewy's founder Ryan Cohen rejects comparisons to Pets.com, telling Yahoo in 2019, "That is an absolute crazy comparison. I think there’s really nothing in common between those two businesses."[64]

References[edit]

  1. ^ "FORM 10-Q". Retrieved November 19, 2018.
  2. ^ "Pets.com WHOIS, DNS, & Domain Info - DomainTools". whois.domaintools.com. Retrieved June 18, 2018.
  3. ^ a b Merlo, Omar (2009). Pets.com Inc.: The Rise and Decline of a Pet Supply Retailer. Ivey Publishing. p. 5.
  4. ^ "Yahoo! News - WebMagic". WebMagic. November 4, 1998. Retrieved June 18, 2018.
  5. ^ a b "Yahoo! Finance - WebMagic". WebMagic. March 29, 1999. Retrieved October 29, 2018.
  6. ^ "Amazon's Pet Projects". Newsweek. June 20, 1999. Retrieved October 1, 2018.
  7. ^ a b "Amazon.com Announces Investment in Pets.com". March 29, 1999. Archived from the original on June 20, 2017. Retrieved February 14, 2014.
  8. ^ Tarsala, Mike. "Pets.com killed by sock puppet". MarketWatch. Retrieved June 22, 2018.
  9. ^ "Pets.com Announces Financing From Amazon.com and Hummer Winblad Venture Partners. - Free Online Library". The Free Library from Farlex. March 29, 1999. Retrieved January 29, 2019.
  10. ^ a b Abelson, Reed. "TECHNOLOGY; Pets.com, Sock Puppet's Home, Will Close". Retrieved June 12, 2018.
  11. ^ "Pets.com to buy assets of rival Petstore.com". CNET. June 13, 2000. Retrieved June 6, 2018.
  12. ^ a b K. Ryan, Peter. How Venture Capital Works.
  13. ^ "Pets.com publishes print magazine - Multichannel Merchant". Multichannel Merchant. June 1, 2000. Retrieved September 28, 2018.
  14. ^ "Pets.com socks it to competitors". Retrieved September 28, 2018.
  15. ^ a b Neuman, Jay. The Complete Internet Marketer.
  16. ^ a b "IQ Interactive Special Report: IQ Q&A - Sock Dogma". Retrieved September 28, 2018.
  17. ^ "10 big dot.com flops - Pets.com (1) - CNNMoney.com". money.cnn.com. Retrieved February 8, 2021.
  18. ^ Andrew Beattie. "Why Did Pets.com Crash So Drastically?". Investopedia. Retrieved February 8, 2021.
  19. ^ "For startups, failure can be a good thing - March 1, 2007". March 3, 2007. Archived from the original on March 3, 2007. Retrieved October 29, 2018.
  20. ^ "Watch 5 of the best Super Bowl commercials from 2000". Ad Meter. January 21, 2015. Retrieved July 21, 2018.
  21. ^ a b "Pets.com raises $82.5 million in IPO". CNET. February 10, 2000. Retrieved June 7, 2018.
  22. ^ a b c d e f g h i Kirk Cheyfitz (2003). Thinking Inside the Box: The 12 Timeless Rules for Managing a Successful Business. Simon & Schuster. pp. 30–32. ISBN 978-0-7432-3575-4. Retrieved April 22, 2009.
  23. ^ Matt Haig (2005). Brand failures: The Truth about the 100 Biggest Branding Mistakes of All Time. Kogan Page Publishers. pp. 188–191. ISBN 978-0-7494-4433-4. Retrieved April 22, 2009.
  24. ^ "CNET.com - News - E-Business - Pets.com moves part of litter to Midwest". November 2, 2000. Archived from the original on November 2, 2000. Retrieved August 29, 2018.
  25. ^ "Pets.com goes out of business - Nov. 7, 2000". money.cnn.com. Retrieved July 26, 2018.
  26. ^ "The Pets.com Phenomenon". NBC News. Retrieved May 21, 2018.
  27. ^ "Pets.com Will Shut Down, Citing Insufficient Funding". WSJ. Retrieved July 26, 2018.
  28. ^ Tarsala, Mike. "Pets.com killed by sock puppet". MarketWatch. Retrieved June 6, 2018.
  29. ^ "The Pets.com Phenomenon". NBC News. Retrieved June 27, 2018.
  30. ^ "Petsmart.com snaps up rival domain name". CNET. December 4, 2000. Retrieved June 18, 2018.
  31. ^ Grenier, Melinda. "Pets.com sells name to rival Petsmart | ZDNet". ZDNet. Retrieved September 30, 2018.
  32. ^ "PetSmart.com Buys Pets.com Domain Name". Retrieved October 29, 2018.
  33. ^ "Petsmart.com buys URL of former rival Pets.com". Computerworld. Retrieved September 24, 2021.
  34. ^ a b Mearian, Lucas (January 2, 2001). "Pets.com to finalize liquidation plans". Computerworld. Retrieved July 18, 2018.
  35. ^ "IPET Holdings Form 10-K Period Ended 12/31/01". U.S. SEC. Retrieved April 26, 2019.
  36. ^ "Pets.commitment: Pets.com is partnering with Best Friends Animal Sanctuary". May 29, 2000. Archived from the original on May 29, 2000. Retrieved July 26, 2018.
  37. ^ "Defunct Pets.com Donates Dog Food". Retrieved September 30, 2018.
  38. ^ "Oak Leaf 27 January 2000 — California Digital Newspaper Collection". cdnc.ucr.edu. Retrieved June 12, 2018.
  39. ^ "Pets.com goes out of business - Nov. 7, 2000". money.cnn.com. Retrieved June 22, 2018.
  40. ^ Kaufman, Leslie. "Media; The Sock Puppet That Roared: Internet Synergy or a Conflict of Interest?". Retrieved June 15, 2018.
  41. ^ Eaton, Leslie. "And Now, a Balloon From Our Sponsor". Retrieved June 24, 2018.
  42. ^ G. Weinzimmer, Laurence. The Wisdom of Failure: How to Learn the Tough Leadership Lessons Without.
  43. ^ [16][10][40][41][42]
  44. ^ "Pets.com goes out of business - Nov. 7, 2000". money.cnn.com. Retrieved June 3, 2018.
  45. ^ "The Puppet That Ate a Dot-Com". Slate Magazine. Retrieved October 29, 2018.
  46. ^ Olsen, Stefanie (July 26, 2000). "Pets.com's puppeteer on strike against ad industry". CNET. Retrieved April 25, 2019.
  47. ^ "Pets.com goes out of business - Nov. 7, 2000". money.cnn.com. Retrieved June 3, 2018.
  48. ^ https://pwschmidt.com/pets
  49. ^ "Pets.com Sock Puppet - Business Insider". Business Insider. June 28, 2018. Archived from the original on June 28, 2018. Retrieved October 29, 2018.
  50. ^ Asen, Ben (2000). Me by me : the pets.com sock puppet book. New York, NY : Ibooks : Distributed by Simon & Schuster. ISBN 1588243702.
  51. ^ "Sock Puppet On Board With Bar None!" (Press release). BarNone. May 9, 2002. Archived from the original on June 2, 2002. Retrieved February 24, 2009. Bar None and Hakan Enterprises, Inc., joined forces to secure the rights for the Sock Puppet – and they are excited to be able to give him a “second chance” in the advertising world.
  52. ^ WATERCUTTER, ANGELA (June 24, 2002). "Sock Puppet Finds a New Home". Los Angeles Times. ISSN 0458-3035. Retrieved June 18, 2018.
  53. ^ "2ND ACT FOR PETS.COM SOCK PUPPET". New York Post. June 19, 2002. Retrieved October 29, 2018.
  54. ^ News, Joelle Tessler, San Jose Mercury. "Sock puppet gets 2nd chance". chicagotribune.com. Retrieved October 29, 2018. {{cite news}}: |last= has generic name (help)
  55. ^ Information on Smigel's lawsuit at The Smoking Gun
  56. ^ "Daily Kent Stater 27 April 2000 — Kent State University". dks.library.kent.edu. Retrieved June 12, 2018.
  57. ^ BROWNFIELD, PAUL (May 4, 2000). "This Legal Dogfight Is No Joke". Los Angeles Times. ISSN 0458-3035. Retrieved July 26, 2018.[dead link]
  58. ^ "PETS.COM POOP$ ON CONAN'S 'PUP'PET". New York Post. April 26, 2000. Retrieved August 11, 2018.
  59. ^ "Pets.com Provides Perspective On Lawsuit With Robert Smigel, Creator of Triumph, the Insult Comic Dog". The Free Library by Farlex. April 27, 2000. Retrieved January 29, 2019.
  60. ^ "Case docket: Pets.com Inc v. Smigel". ia802307.us.archive.org. Retrieved August 10, 2018.
  61. ^ "2HRS2GO: E*Trade wins ad Super Bowl". CNET. January 2, 2002. Retrieved July 21, 2018.
  62. ^ "E-Trade - Ghost Town - Ad Age". adage.com. January 28, 2001. Archived from the original on February 5, 2017. Retrieved October 29, 2018.
  63. ^ "The greatest defunct Web sites and dotcom disasters". CNET. June 5, 2008. Archived from the original on June 7, 2008. Retrieved June 5, 2008.
  64. ^ Alexis Christoforous (August 8, 2019). "Chewy founder: Don't compare us to Pets.com". Yahoo. Retrieved January 26, 2022.

External links[edit]