Founder: Greg McLemore
Industry: Pet supplies, Ecommerce
Year Founded: 1994
Year Defunct: 2000
In November 21, 1994, the Pets.com domain name was registered by Pasadena-based Entrepreneur Greg McLemore. The Pets.com website launched in early November 1998 as a spinoff of WebMagic and was incorporated In February 1999. After its start by Greg McLemore and Eva Woodsmall, Pets.com was purchased in early 1999 by Julie Wainwright. Amazon.com was involved in Pets.com's first round of venture funding, purchasing a majority 54% stake in the company. Amazon, along with Humber Winblad Venture Partners and Bowman Capital Management invested $10.5 million into Pets.com in March 1999.The CEO of Pets.com, Julie Wainwright, said of Amazon's investment, "This is a marriage made in heaven". By October 2000, Amazon had a 30% stake in the company. 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.
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. Pets.com started with a five-city advertising campaign, which was expanded to 10 cities by Christmas 1999. The company succeeded in making its mascot, the Pets.com sock puppet, well known. The Pets.com site design was extremely well-received, garnering several advertising awards. In January 2000, the company aired its first national commercial as a Super Bowl ad which cost the company $1.2 million. That ad was ranked #5 by USA Today's Ad Meter. The company went public on the NASDAQ stock exchange in February 2000 and raised $82.5 million; the former Nasdaq stock symbol was IPET.
Despite its success in building brand recognition, it was uncertain whether a substantial market niche existed for Pets.com. No independent market research preceded the launch of Pets.com. During its first fiscal year (February to September 1999) Pets.com earned $619,000 in revenue, and spent $11.8 million on advertising. 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. 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. 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.
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. 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. The company announced on November 7, 2000 that they would cease taking orders on November 9, 2000 at 11 a.m. PST and laid off 255 of their 320 employees. Pets.com had around 570,000 customers before its shutdown.Pets.com stock had fallen from its IPO price of $11 per share in February 2000 to $0.19 the day of its liquidation announcement. At its peak, the company had 320 employees, 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.As of 2019, the Pets.com domain redirects to PetSmart.com.
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.: Tear away label
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