PF506 Marketing Management Individual Paper
(Stan) Kun-Ching Lin
Electronic Currency Failure – Flooz.com. During the time when dot-com bubble occurred (roughly covering 1995 to 2000), there were many seemingly creative ideas failed to satisfy customers due to the lack of thorough market research before these dot-com ventures confidently launched their unproven business model. Flooz.com, one among these defunct ventures, can serve as a good example. Flooz.com started in Feburary1999, created by Robert Levitan.(1) Its main design was to establish a virtual currency system in which the currency is known as Flooz currency and allow users to use the currency to purchase gift certificate or shop at Flooz's partner sites. Robert wanted to innovate a brand new way of gift giving: A buys a gift certificate and sends the stored value attached to electronic greeting cards or emails to B. B can choose to consume right away or save the value. It did sound like a great deal, convenient and fashionable, which as well gave people easy access to shopping at online merchants without having a credit card. Flooz signed with over 60 online merchants, including Starbucks, The Barnes and Noble, Tower Record and so forth. When holidays or special occasion came around, such as Mother's Day, Graduation Day, Flooz and its partner stores would hold special events for users to consume more. For example, as users accumulated enough Flooz credits, which were given as the promotional bonus through consumption (either purchasing gifts at online stores or purchasing the gift certificate at Flooz.com), they could later redeem the credits for real merchandise at designated online stores.(2) Robert's idea not only attracted to venture capitals and raised $35 million from investors, but also had comedy actress, Whoopi Goldberg to endorse and promote Flooz.com on TV commercials. Despite all the money and endorsement, Flooz.com finally closed down and filed a bankruptcy protection in August...
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