STUDENT NO.: 914646
PRESENTED TO: Dr. THERESSA BILLIOT
CASE 17: Pets.com.: Rise and Decline of a Pet Supply Retailer
Pets.com was one of the online retailers of pet supplies, integrating product sales with expert information and professional resources. For them to compete and survive in the industry, it hoped to develop its attributes, which included brand recognition, product selection, quality of Web Store, reliability in ordering and shipping, customer service and competitive pricing. However, the company experience net loss soon after it started operation, and the hope of favorable IPO didn’t work. The company was at the edge of failure and at the end it ended up being closed.
1. Should Wainwright have offered a shareholding position to Amazon.com? Assess the rationale behind this decision
Wainwright joined Pets.com as a CEO when the market for pet products was extremely fragmented. Sales went through a chain of multiple stores to reach the final consumer, like mass merchants, independent pet stores and supermarkets. The industry was so attractive and booming, and was so appealing to a greater number of competitors. Analysts were so optimistic of the industry being taken to the internet because it had already proven to be a successful distribution channel for other products like books, software and music. Wainwright was hired to the company to lead the company and establish it in the industry as a market leader of the online pet supplies category. Wainwright came up with an idea of joining forces with Amazon.com because she believed Amazon.com had established itself as the leader in selling books and music online and might be interested in entering the pet supplies category. This made her to decide to offer shares of Pets.com to Amazon.com because she saw the move as significantly less risky with Amazon.com being a partner rather than a competitor.
The question of if Wainwright should have offered a shareholding position to Amazon.com, I believe the answer is yes. Amazon.com being a well established leader in the online/internet business, could poss a great threat in terms of competition if they decided to venture into offering pet products to consumers. Another reason was that since other competitors of Pets.com, that is, Petopia.com, Petsmart.com and Petstore.com obtained funding from investors, Pet.com needed enough capital to keep at par with other competitors. The partnership was an early success for Wainwright because it eliminated the risk of a very strong potential competition from its main competitors as mentioned earlier, and also enabled them to use the experience and strategic assets of Amazon.com to build a competitive advantage. Wainwright wanted to be backed by a well established venture capitalist who had successful business model to learn from, thus opted for Amazon.com. In addition to receiving cash, Pets.com also obtained a link on Amazon.com's home page and also help them recruit top talented employees who turned to counterparts in Amazon for guidance on any kind of business issues. This was a smart move by Wainwright and on her comment about the deal, she said that the deal was a marriage from heaven and clearly positioned Pets.com as the online category leader.
2. What were the advantages and disadvantages of having Amazon.com as a partner to Pets.com?
The main aim of Wainwright's idea of partnering with Amazon.com was the fear that it might be looking to enter the pet supplies category. She saw Amazon.com posing a great threat as a competitor if it decided to venture into the industry since it had established itself as the leader in selling books and music online. Therefore, this was a good strategy since it eliminated what could be seen as the major competitor (threat) if Amazon.com wished to venture in the pet supplies category. Other advantages of partnering with Amazon.com may include the following;
Pets.com received lots of...