Wikipedia

Pets.com

This article is about the Pets.com online company. For the retail store company that currently owns the Pets.com domain name and hosts an online Pet Parent community, seePetSmart.

Pets.comwas adot-com enterpriseheadquartered inSan Francisco,U.S, that sold pet supplies to retail customers. The website was launched in November 1998 and was shut down in November 2000. A high-profile marketing campaign gave it a widely recognized public presence, including an appearance in the 1999Macy's Thanksgiving Day Paradeand an advertisement in the2000Super Bowl.Its popularsock puppetadvertising mascot was interviewed byPeoplemagazine and appeared onGood Morning America.

Pets.com
Company typePublic
Nasdaq:IPET
FoundedNovember 1998;25 years ago(1998-11)
DefunctNovember 9, 2000;23 years ago(2000-11-09)
FateSelf-liquidated
HeadquartersSan Francisco,California, United States[1]
Number of employees
320
Websitewww.pets.comat theWayback Machine(archived March 1, 2000)

Although sales rose dramatically due to the attention, the company failed to become profitable and became known as one of the biggest victims of thedot-com crashin 2000. Since 2001, the Pets.com domain has redirected toPetSmart's website.

History

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On November 21, 1994, the Pets.com domain name was registered byPasadena-based entrepreneur Greg McLemore.[2][3]The Pets.com website launched in early November 1998 as a spinoff of WebMagic[4][5]and Pets.com was incorporated in February 1999.[3]After its start by Greg McLemore and Eva Woodsmall, Pets.com was purchased in early 1999 byJulie Wainwright.[5][6]Amazon.comwas involved in Pets.com'sfirst roundofventure funding,purchasing a majority 54% stake in the company.[7]Amazon, along withHummer Winblad Venture Partnersand Bowman Capital Management invested $10.5 million into Pets.com in March 1999.[8][9]TheCEOof Pets.com,Julie Wainwright,said of Amazon's investment, "This is a marriage made in heaven".[7]By October 2000, Amazon had a 30% stake in the company.[10]Pets.com spent most of the venture funding on largewarehousesand other shipment infrastructures, as well as purchasing their biggest online competitor at the time, Petstore.com in June 2000 for $10.6 million.[11][12]

A regional advertising campaign using a variety of media began, which includedtelevision,radio,print,outdoor advertisingand a Pets.com magazine, which had its first issue published in November 1999. The first issue was sent to 1 million pet owners in theUnited Statesduring the month it was first published.[13][14][15][16]Pets.com started with a five-city advertising campaign, which was expanded to 10 cities by Christmas 1999.[citation needed]The company succeeded in making its mascot, the Pets.com sock puppet, well known.[17][18]The Pets.com site design was extremely well-received, garnering several advertising awards.[citation needed]In January 2000, the company aired its first national commercial as aSuper Bowlad which cost the company $1.2 million.[19]That ad was ranked #5 byUSA Today's Ad Meter.[20]The company went public on the NASDAQ stock exchange in February 2000 and raised $82.5 million; the former Nasdaq stock symbol was IPET.[21][12]

Despite its success in building brand recognition, it was uncertain whether a substantial market niche existed for Pets.com.[22]No independent market research preceded the launch of Pets.com.[22]During its first fiscal year (February to September 1999), Pets.com earned $619,000 in revenue, and spent $11.8 million on advertising.[22]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.[22]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.[22][23]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.[22]

In September 2000, Pets.com opened a new customer service call center inGreenwood, Indianaand relocated the majority of its customer work force toIndianain order to cut costs.[24]They aggressively undertook actions to sell the company.PetSmartoffered less than the net cash value of the company, and Pets.com's board turned down that offer.[citation needed]The company announced on November 7, 2000[25]that they would cease taking orders on November 9, 2000 at 11am PST and laid off 255 of their 320 employees.[26][27]Pets.com had around 570,000 customers before its shutdown.[28]Pets.com stock had fallen from its IPO price of $11 per share in February 2000[21]to $0.19 the day of its liquidation announcement.[citation needed]At its peak, the company had 320 employees,[29]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.[30][31][32]As of 2024, the Pets.com domain redirects to PetSmart.com.[33]

Wainwright and nine other executives stayed during the liquidation and held a stockholders' meeting on January 16, 2001 to finalize the liquidation.[34]Wainwright received $235,000 in severance on top of a $225,000 "retention payment" while overseeing the closure.[34]The company changed its name to IPET Holdings, Inc. on January 16, 2001 and liquidation of the company was completed on January 18.[35]

Charity work

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During the company's existence, Pets.com partnered withBest Friends Animal Sanctuaryto start acharitycalled "Pets.commitment", which provided funding and support foranimal shelters,animal therapy,service dogprograms,pet careandwellness organizations.The charity's motto was "people helping animals, animals helping people."[36]After the Pets.com website closed in November 2000, Pets.com donated more than 21 tons of dog food to helpMushersinAlaska's Interiorin December 2000.[37]

Sock puppet

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The Pets.com sock puppet

Pets.com hired theSan Franciscooffice ofTBWA\Chiat\Dayto design its advertising campaign. The firm had recently created the popularTaco Bell chihuahua.For Pets.com, it designed a doglike sock puppet that carried a microphone in its paw.[22]The puppet, performed byMichael Ian Black(an alumnus ofMTV's surrealist comedy sketch showThe State), was a simplesock puppetwith button eyes, flailing arms, a watch for a collar, and a stick microphone emblazoned with "pets.com".[22][38]The sock puppet first appeared in Pets.com's advertising in August 1999.[39]

As the puppet's fame grew through 1999 and 2000, it gained almostcult statusand widespread popularity. The puppet made an appearance on ABC'sGood Morning AmericaandNightline,WABC-TV-producedLive with Regis and Kathie Lee,was interviewed inPeopleMagazine,TimeMagazine,Entertainment WeeklyandAdweekand even had a 36-foot-tall (11 m) "falloon" made in its image for the 1999Macy's Thanksgiving Day Parade.[43]In addition to the media appearances the Pets.com puppet made, merchandising was also done for the company including clothing, other trinkets, and a retail version of the sock puppet that delivered some of the puppet's famous lines, which started shipping on June 13, 2000.[44][45]More than 10,000 puppets had been sold in its first week of availability and more than 35,000 puppets had been sold by late-July 2000.[46]The Pets.com sock puppet toy was available until the website's shutdown.[47]The Pets.com sock puppet also had an “autobiography” of himself titled"Me by Me",which was released in 2000, acoffee table bookfeaturing a compilation of photos with quotes.[48][49]

After Pets.com liquidated, Hakan and Associates andBar None, Inc.purchased the rights to the puppet under a joint venture called Sock Puppet LLC for $125,000 in 2002.[22][50][51]Bar None, Inc., an American automotive loan firm, gave the puppet a new slogan: "Everyone deserves a second chance." and aired nine commercials featuring the puppet in July 2002.[52][53]

Lawsuit

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As Pets.com's recognition began to grow, it attracted the attention of the creators ofTriumph the Insult Comic Dog.Representatives fromRobert Smigelsent letters, including acease and desistdemand, to Pets.com claiming that the puppet was based on Triumph. Pets.com responded by suing Smigel in theU.S. District Courtin San Francisco in April 2000, demanding $20 million in damages fordefamationand trade libel.[54][55][56][57]

Wainwright responded to the lawsuit, saying that "We were surprised when we received the letter because there is obviously no relation between the Pets.com Sock Puppet and Triumph".[58]Canadian sock puppet characterEd the Sock,who had previously accused Smigel of basing his Triumph character on himself, also used the incident for publicity.

The lawsuit was dismissed in February 2001 byJudgeCharles R. Breyer.[59]

Legacy

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The publicity surrounding the Pets.com puppets, combined with the company's collapse, made it such a symbol of dot-com folly thatE-Tradereferred to it in an advertisement during the2001 Super Bowl.The commercial, which parodies the famouscrying Native public service advertisementfrom 1971, shows achimpanzeeriding on horseback through a ruined dot-com landscape. The chimpanzee comes across a company named "eSocks.com" that is being demolished and weeps when a discarded sock puppet lands at his feet.[15][60][61]

In June 2008,CNETnamed Pets.com as one of the greatest dot-com disasters.[62]

Pets.com's concept was successfully realized byChewy.com,prompting comparison between the two companies by analysts after Chewy held their IPO in 2019. Chewy's founderRyan Cohenrejects comparisons to Pets.com, tellingYahooin 2019, "That is an absolute crazy comparison. I think there’s really nothing in common between those two businesses."[63]

References

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  1. ^"FORM 10-Q".RetrievedNovember 19,2018.
  2. ^"Pets.com WHOIS, DNS, & Domain Info – DomainTools".whois.domaintools.com.RetrievedJune 18,2018.
  3. ^abMerlo, Omar (2009).Pets.com Inc.: The Rise and Decline of a Pet Supply Retailer.Ivey Publishing. p. 5.
  4. ^"Yahoo! News – WebMagic".WebMagic.November 4, 1998.RetrievedJune 18,2018.
  5. ^ab"Yahoo! Finance – WebMagic".WebMagic.March 29, 1999.RetrievedOctober 29,2018.
  6. ^"Amazon's Pet Projects".Newsweek.June 20, 1999.RetrievedOctober 1,2018.
  7. ^ab"Amazon.com Announces Investment in Pets.com".March 29, 1999. Archived fromthe originalon June 20, 2017.RetrievedFebruary 14,2014.
  8. ^Tarsala, Mike."Pets.com killed by sock puppet".MarketWatch.RetrievedJune 22,2018.
  9. ^"Pets.com Announces Financing From Amazon.com and Hummer Winblad Venture Partners. – Free Online Library".The Free Library fromFarlex.March 29, 1999.RetrievedJanuary 29,2019.
  10. ^abAbelson, Reed."TECHNOLOGY; Pets.com, Sock Puppet's Home, Will Close".RetrievedJune 12,2018.
  11. ^"Pets.com to buy assets of rival Petstore.com".CNET.June 13, 2000.RetrievedJune 6,2018.
  12. ^abK. Ryan, Peter.How Venture Capital Works.
  13. ^"Pets.com publishes print magazine – Multichannel Merchant".Multichannel Merchant.June 1, 2000.RetrievedSeptember 28,2018.
  14. ^"Pets.com socks it to competitors".RetrievedSeptember 28,2018.
  15. ^abNeuman, Jay.The Complete Internet Marketer.
  16. ^ab"IQ Interactive Special Report: IQ Q&A – Sock Dogma".RetrievedSeptember 28,2018.
  17. ^"10 big dot.com flops – Pets.com (1) – CNNMoney.com".money.cnn.com.RetrievedFebruary 8,2021.
  18. ^Andrew Beattie."Why Did Pets.com Crash So Drastically?".Investopedia.RetrievedFebruary 8,2021.
  19. ^"For startups, failure can be a good thing – March 1, 2007".March 3, 2007. Archived fromthe originalon March 3, 2007.RetrievedOctober 29,2018.
  20. ^"Watch 5 of the best Super Bowl commercials from 2000".Ad Meter.January 21, 2015.RetrievedJuly 21,2018.
  21. ^ab"Pets.com raises $82.5 million in IPO".CNET.February 10, 2000.RetrievedJune 7,2018.
  22. ^abcdefghiKirk Cheyfitz (2003).Thinking Inside the Box: The 12 Timeless Rules for Managing a Successful Business.Simon & Schuster. pp. 30–32.ISBN978-0-7432-3575-4.RetrievedApril 22,2009.
  23. ^Matt Haig (2005).Brand failures: The Truth about the 100 Biggest Branding Mistakes of All Time.Kogan Page Publishers. pp. 188–191.ISBN978-0-7494-4433-4.RetrievedApril 22,2009.
  24. ^"CNET.com – News – E-Business – Pets.com moves part of litter to Midwest".November 2, 2000. Archived fromthe originalon November 2, 2000.RetrievedAugust 29,2018.
  25. ^"Pets.com goes out of business – Nov. 7, 2000".money.cnn.com.RetrievedJuly 26,2018.
  26. ^"The Pets.com Phenomenon".NBC News.RetrievedMay 21,2018.
  27. ^"Pets.com Will Shut Down, Citing Insufficient Funding".WSJ.RetrievedJuly 26,2018.
  28. ^Tarsala, Mike."Pets.com killed by sock puppet".MarketWatch.RetrievedJune 6,2018.
  29. ^"The Pets.com Phenomenon".NBC News.RetrievedJune 27,2018.
  30. ^"Petsmart.com snaps up rival domain name".CNET.December 4, 2000.RetrievedJune 18,2018.
  31. ^Grenier, Melinda."Pets.com sells name to rival Petsmart".ZDNet.RetrievedSeptember 30,2018.
  32. ^"PetSmart.com Buys Pets.com Domain Name".RetrievedOctober 29,2018.
  33. ^"Petsmart.com buys URL of former rival Pets.com".Computerworld.RetrievedSeptember 24,2021.
  34. ^abMearian, Lucas (January 2, 2001)."Pets.com to finalize liquidation plans".Computerworld.RetrievedJuly 18,2018.
  35. ^"IPET Holdings Form 10-K Period Ended 12/31/01".U.S. SEC.RetrievedApril 26,2019.
  36. ^"Pets.commitment: Pets.com is partnering with Best Friends Animal Sanctuary".May 29, 2000.Archivedfrom the original on May 29, 2000.RetrievedJuly 26,2018.
  37. ^"Defunct Pets.com Donates Dog Food".RetrievedSeptember 30,2018.
  38. ^"Oak Leaf 27 January 2000 — California Digital Newspaper Collection".cdnc.ucr.edu.RetrievedJune 12,2018.
  39. ^"Pets.com goes out of business - Nov. 7, 2000".money.cnn.com.RetrievedJune 22,2018.
  40. ^Kaufman, Leslie (March 27, 2000)."Media; The Sock Puppet That Roared: Internet Synergy or a Conflict of Interest?".The New York Times.RetrievedJune 15,2018.
  41. ^Eaton, Leslie (November 24, 1999)."And Now, a Balloon From Our Sponsor".The New York Times.RetrievedJune 24,2018.
  42. ^G. Weinzimmer, Laurence.The Wisdom of Failure: How to Learn the Tough Leadership Lessons Without.
  43. ^[16][10][40][41][42]
  44. ^"Pets.com goes out of business - Nov. 7, 2000".money.cnn.com.RetrievedJune 3,2018.
  45. ^"The Puppet That Ate a Dot-Com".Slate Magazine.RetrievedOctober 29,2018.
  46. ^Olsen, Stefanie (July 26, 2000)."Pets.com's puppeteer on strike against ad industry".CNET.RetrievedApril 25,2019.
  47. ^"Pets.com goes out of business - Nov. 7, 2000".money.cnn.com.RetrievedJune 3,2018.
  48. ^"Pets.com Sock Puppet - Business Insider".Business Insider.June 28, 2018. Archived fromthe originalon June 28, 2018.RetrievedOctober 29,2018.
  49. ^Asen, Ben (2000).Me by me: the pets.com sock puppet book.New York, NY: Ibooks: Distributed by Simon & Schuster.ISBN1588243702.
  50. ^"Sock Puppet On Board With Bar None!"(Press release).BarNone.May 9, 2002. Archived fromthe originalon June 2, 2002.RetrievedFebruary 24,2009.Bar None and Hakan Enterprises, Inc., joined forces to secure the rights for the Sock Puppet – and they are excited to be able to give him a "second chance" in the advertising world.
  51. ^WATERCUTTER, ANGELA (June 24, 2002)."Sock Puppet Finds a New Home".Los Angeles Times.ISSN0458-3035.RetrievedJune 18,2018.
  52. ^"2ND ACT FOR PETS.COM SOCK PUPPET".New York Post.June 19, 2002.RetrievedOctober 29,2018.
  53. ^"Sock puppet gets 2nd chance".chicagotribune.com.RetrievedJuly 30,2023.
  54. ^Information on Smigel's lawsuit atThe Smoking Gun
  55. ^"Daily Kent Stater 27 April 2000 — Kent State University".dks.library.kent.edu.RetrievedJune 12,2018.
  56. ^BROWNFIELD, PAUL (May 4, 2000)."This Legal Dogfight Is No Joke".Los Angeles Times.ISSN0458-3035.RetrievedJuly 26,2018.[dead link]
  57. ^"PETS.COM POOP$ ON CONAN'S 'PUP'PET".New York Post.April 26, 2000.RetrievedAugust 11,2018.
  58. ^"Pets.com Provides Perspective On Lawsuit With Robert Smigel, Creator of Triumph, the Insult Comic Dog".The Free Library byFarlex.April 27, 2000.RetrievedJanuary 29,2019.
  59. ^"Case docket: Pets.com Inc v. Smigel".ia802307.us.archive.org.RetrievedAugust 10,2018.
  60. ^"2HRS2GO: E*Trade wins ad Super Bowl".CNET.January 2, 2002.RetrievedJuly 21,2018.
  61. ^"E-Trade - Ghost Town - Ad Age".adage.com.January 28, 2001.Archivedfrom the original on February 5, 2017.RetrievedOctober 29,2018.
  62. ^"The greatest defunct Web sites and dotcom disasters".CNET. June 5, 2008. Archived fromthe originalon June 7, 2008.RetrievedJune 5,2008.
  63. ^Alexis Christoforous (August 8, 2019)."Chewy founder: Don't compare us to Pets.com".Yahoo.RetrievedJanuary 26,2022.
edit
  • Pets.com(domain now owned byPetSmart)
  • "Pets.com, Sock Puppet's Home, Will Close"New York Timesarticle
  • "Investors put Pets.com to sleep; Garden.com wilts"—Internet Retailer via theWayback Machine
  • "Pets.com is extraordinary!"—Epinionsvia theWayback Machine
  • "Pets.com to finalize liquidation plans"—InfoWorldvia theWayback Machine
Retrieved from "https://en.wikipedia.org/w/index.php?title=Pets.com&oldid=1243922903"