OPINION: The first digital Christmas will be the last for some dotcoms

Is Christmas 2000 the first digital Yule? Will you be getting your turkey from urbanfetch.com? Buying perfume from clickmango.com? Or perhaps ordering Christmas CDs from boxman.com?

Is Christmas 2000 the first digital Yule? Will you be getting your turkey from urbanfetch.com? Buying perfume from clickmango.com? Or perhaps ordering Christmas CDs from boxman.com?

I'm sorry to say you won't, because all three have gone bust. And they're not the only ones. You can add to this list furniture.com, dressmart.com, and theman.com. Oh, and streamline.com, thestreet.co. uk, pets.com and mothernature.com. Did I mention bike.com and ibelieve. com? Even bagsoftime.com has closed, presumably having run out of product.

The year of the dotcom boom has also been the year of dotcom doom. According to Webmergers, the leading internet experts, over 100 UK dotcom businesses have bitten the dust in 2000, 22 in October alone, and a further 21 in the first two weeks of November. Almost 10,000 jobs are estimated to have been lost in the fallout.

Even the big and famous have suffered. Sixty publicly quoted internet companies have seen their share prices fall by 90%. The hugely over-hyped lastminute.com has seen its market value tumble from pounds 730m to pounds 140m. The Nasdaq index of technology shares in New York has lost over one-third of its value since September.

Whatever way you look at it, 2000 has been a cataclysmic year for the dotcom sector. So what went wrong with the digital dream?

It is tempting to search for a single I-told-you-so reason, some monster banana skin only revealed by the arc-lamp of hindsight. In fact there are many reasons. Wildly inexperienced (though enthusiastic) management.

Wildly optimistic investors. In some cases sheer profligacy and hubris.

For example, Boo.com, the online fashion retailer, spent about pounds 80m in the seven months before it went into receivership. In the contorted logic of the new economy, the bigger the 'burn rate' (money down the pan) the sexier the company. The sector is older and wiser now. Companies are cutting costs to stay afloat. Burst.com, supplier of online videos, has shed 80% of its staff to keep running costs down.

In some cases, you wonder whether a grown-up business plan was ever written.

The relative ease and cost-efficiency of selling online does not necessarily generate healthy margins, as some dotcoms on wafer-thin commissions have discovered to their cost. Their numbers do not - and never will - add up.

Marketing and advertising must take their share of the blame too. Many ad campaigns left consumers baffled, and the deluge of new and unfamiliar brand names seems to have led to a kind of dotcom 'blindness'.

All these reasons are plausible. But perhaps the most important cause of the collapse is that too many dotcom services were simply not good enough. Recently, lastminute.com was voted the worst travel web site by readers of The Daily Telegraph. Which just goes to show that flashy marketing and PR can't paper over the cracks of a sub-standard product.

Online business is here to stay and will in time thrive and prosper. But we have learned this year that there is no certain or easy route to success.


Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now


Lynx tells men not to leave love to fate
HBO captures awkwardness of watching sex scenes with parents
Primark to open first US stores with Boston chosen as flagship location
Marketing spend on the up but a reality check is needed before celebrating
Top 10 ads of the week: Jackpotjoy and BT Broadband fend off Kevin Bacon
Lidl beats Tesco to 10m Facebook fans
Center Parcs ad banned for encouraging parents to take kids out of school
Coca-Cola, Cadbury and Amazon named top brands for targeting youth market
Leaked document shows Nokia to be rebranded as Microsoft Mobile
Nike lays-off hardware staff in move that casts doubt on future of FuelBand
Greenpeace says save the bees or humans will die
What brands need to know about changes to VAT and online downloads in 2015
Jimmy Savile victims urged to claim compensation in new ad campaign
UKIP launches biggest  ad campaign and stirs up 'racist' accusations
Apple boss Tim Cook provides voiceover on ad touting firm's renewed green commitments
John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message