Pets. Com Case Study

1044 Words 4 Pages
How did the product and the company come about?
Pets.com was a San Francisco-based retailer, it was one of the earlier companies that existed as a virtual firm with no brick and mortar store locations. Pets.com was created to sell pet food and accessories using the internet as a storefront one of the first e-retailers. The premise was that Pets.com could sell directly to customers online and cut out the middleman. Pets.com would then pass the saving on to the customer. Customers that shopped at Pets.com would get better deals on pet supplies, and pet food, and customer could take advantage of Pets buying power. Customers could also browse through different pet categories, choose the products they like and have them conveniently delivered
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When the site was launched in November, 1998 Pets.com already had real competition and was heading into a Red Ocean situation. Pets.com was not the only pet food supplier with an early online presence, some of the more well-known competitors included PetsMart.com, Petopia.com, Inc and PetStore.com. The company said its competitors, particularly in the case of PetsMart.com, have the advantage of leveraging the brand awareness of their pet retail store partner. (Cnet.com 2002) Pets.com made sure it had its first-mover advantage being the first of pet stores to enter the World Wide Web, and operating exclusively online. Even with rising competition in the online pet marketplace, Pets.com appeared to be on a road to success in the beginning of 1999. The company had an advertising agreement with Amazon.com where it provided Pets.com with online promotions. Amazon.com also has a significant equity stake in the company, and continued to own about 30.4 percent of its stock after this offering in the early part of the year 2000(Cnet.com 2003) . The successful marketing campaign of pets.com and the recognition it received never brought profits for Pets.com. The executives at the company decided to close its doors in November, 2000 months after its IPO, and just two years after its launch. Later on the former CEO Julie Wainwright explained in an …show more content…
Pets.com would have realized that the threat of new entrants would be high, especial during the early 2000’s with all of the startup web companies. Pets.com would have known that the rivalry between both brick and mortar, and online companies would exist, and that they had no choice to be a part of it. The competitive rivalry would lead to price wars and cause Pets.com to operate a smaller profit margins while attempting to grow. The threat of substitution is one area where the porter’s model would have greatly helped. Pets.com would have discovered that their main competitors and their biggest treat of substitution was not from the other pet food supplies, but from the well ran discount retailers that happen to sell pet supplies and food. Supplier and Buyer power is where Pets.com could have learned more about how the pet food industry operates. Under supplier power the top three pet food manufactures are owned by the Mars Company, Colgate Palmolive, and Procter and Gamble. (DailyPuppy.com 2016) These well know suppliers demand prices be kept at certain levels and marketing standard be kept when selling their products, such as periodic sales and high minimum orders. Customer also are brand conscience when it comes to pet food so Pets.com would have no

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