[Editor’s note] Tuesday, we wrote about a startup called PetFlow and drew the obvious comparison between PetFlow and Pets.com.
Former Pets.com CEO Julie Wainwright took exception to what we had to say about the demise of her former company. Wainwright, who is now the founder & CEO of Smart Now, had this to say in the comments section of our story:
Here is the real story behind Pets.com.
We did sell dog food for 1/2 price for 2 weeks only as a customer acquisition tool — and because the 8 other pets sites funded were doing the same. We also had an auto order feature. We did NOT go out of business because we were selling pet food for below cost. We stocked and sold over 15,000 skus of pet related items–of which less than 600 hundred were pet food. Our average order was close to $37 — only 50% of order had any food item in them.
Here is what the world looked like in 2000….there were no plug and play solutions for ecommerce/warehouse management and customer service that could scale…which means that we had to employ 40+ engineers Cloud computing did not exist, which means that we had to have a server farm and several IT people to insure that the site did not go down. There were less than 250 Million worldwide Internet consumers in 2000- now there are 5 Billion. Amazon has reported a loss of nearly $900M in 1999…because guess what, ecommerce is a business of scale. And, the Internet bubble had burst…which meant that NO ONE was getting funded. Pets.com need a total of $260M of funding to get to breakeven. Sounds nuts now, but that was considered acceptable now. We had raised a total of $180M…and we knew that it would be hard if not impossible to raise the capital to get to break-even.
The financial market was in a tailspin and the management of Pets.com believed that the company should be shut down to return money to shareholders…not run to bankruptcy. Please note that at least 1100 Internet companies, including Webvan with losses of over $1.5B, chose to file bankruptcy. Alex, I wish you the best. I also hope you get your facts straight before giving quotes to the media about Pets.com. You should be so lucky to create a brand icon and a company that acheived over $45M in revenue in nine months –leaving its competition in the dust and have a management team around you that makes hard decisions.
Read the original story here.