E-Commerce Deaths Topped 100 Last Year

Last year, 210 Internet firms — more than half of them e-commerce companies — ceased operations, according to a report released Wednesday by merger and acquisitions tracking firm Webmergers.com.

Webmergers said that 109 e-commerce firms folded their tents in 2000, along with more than 60 content sites. The rest of the failures were in the infrastructure and service fields.

The final count shows that the dot-com collapse accelerated as the end of the year approached. December saw 40 shutdowns, following a total of 46 in November.

Webmergers also said that 15,000 jobs were lost as a result of shuttered companies, and that US$1.5 billion worth of investment — including venture capital and public stock market value — went down with the firms.

Time Flies, Capital Flees

Webmergers president Tim Miller said the shutdowns have a range of causes, but noted that the blazing speed at which Internet deals were being done in 1999 and early in 2000 prompted many companies to spend capital as quickly as it was being raised.

“By the time [companies] realized their investors had fled, they were already facing shutdown,” Miller said.

Miller believes that many firms erred by waiting too long to realize they could not survive on their own. Firms that approach potential merger partners before their cash runs out have a better chance of sealing a deal, he added.

No Single Profile

The e-commerce firms that gave up their battles for profits during 2000 represent a cross-section of the industry. While some firms folded after just months in operation and with little name recognition, others had built strong followings over the course of several years.

Also, while privately held companies made up the bulk of the failures, publicly traded firms were not immune to the shakeout.

Garden.com, for instance, announced it would close in mid-November, after nearly five years in operation and despite attracting 1 million members. Pets.com also made plans for a shutdown late in the year, despite having one of the most recognizable corporate trademarks in the form of the Pets.com sock puppet.

Busy Fourth Quarter

While the shakeout was predicted by some analysts prior to 2000, and began to take shape in the spring when UK-based Boo.com said it was unable to find a fresh round of financing, the closures reached a fever pitch by year’s end.

Webmergers said that nearly 60 percent of the year’s dot-com failures occurred during the fourth quarter. Other shutdowns during the last two months of 2000 included Furniture.com, MotherNature.com and online grocer Streamline.com.