Dot.com: Online Pet Retailing

By: Tom Nicholas and David Chen

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Synopsis: From 1995 to 1999, the U.S. experienced a period of tremendous growth in its information technology (IT) sector. The IT industry, although it accounted for less than 10% of the U.S. economy's total output, contributed disproportionately to economic growth. One market that was particularly contentious was online pet supply retailing. Pet supply retailing had an estimated worth of $31 billion in 1997, and in the late 1990s, several startups and brick-and-mortar-based companies launched online retail stores, hoping to become the premiere (and perhaps the only) online pet supplies retailer. Two companies emerged as pure play frontrunners: Oakland-based Petstore.com and San Francisco-based Pets.com. In the years that followed, online pet supply retailers were widely regarded by the media as epitomizing the excesses and the follies of dot-com speculative mania in the late 1990s that culminated in the 2000 stock market crash. In 2008, CNet pronounced Pets.com as one of the greatest dot-com disasters in history. But what led to the failure, and subsequent crucifixion, of these one-time media darlings? Were Petstore.com and Pets.com the victim of poor strategic decisions, a prohibitive and crowded market, investor attitudes that destroyed their chances of success, or perhaps just bad luck or bad timing?