Pets.com, famous for an aggressive advertising campaign that made its sock puppet mascot a star, said Tuesday that it's laying off 255 out of 320 employees, selling its URL and icons, and closing up shop. Amazon and Walt Disney (DIS) both invested in the company but aren't putting up any more funds.
The online pet supply e-commerce site, based in San Francisco, had tried since early summer to raise additional capital and more recently to sell the company, it said in a release Tuesday. Working with Merrill Lynch (MER), Pets.com contacted 50 potential investors or acquirers but found only eight that were willing to even talk with the company.
In the end, Pets.com, which was considered the leader in its niche field, succumbed to the same conditions that are pummeling other electronic commerce ventures.
"It is well known that this is a very, very difficult environment for business-to-consumer Internet companies," Chairman and CEO Julie Wainwright said in the release. "With no better offers and avenues effectively exhausted, we felt that the best option was an orderly wind down with the objective to try to return something back to the shareholders."
Amazon.com (AMZN) had invested close to $60 million to acquire about one-third of the company, and Walt Disney took a 5 percent stake. Pets.com also is a minority shareholder in the online pet information site PetPlace.com, which re-launched in July.
In addition to securing the backing of Amazon and Walt Disney, Pets.com was the only one in its niche to achieve a public offering. It's large advertising budget won it brand recognition and a mascot so popular that the company licensed the Pets.com sock puppet for sale in stores and over the Internet. But the company could not translate all of this into online sales and profitability.
The demise of Pets.com may signal the end for the online pet supplies market, a sector in which four companies received hundreds of millions in funding last year. In June, after raising $150 million and failing to build a strong brand, competitor Petstore.com shut down and sold its consumer list to Pets.com for $13 million in stock. At the end of October, Petopia laid off 120 employees, more than half of its staff, after the San Francisco-based company couldn't find a partner to acquire the company or loan it more money. Meanwhile, Petsmart.com, which is backed by brick-and-mortar retailer Petsmart Inc. and Internet incubator Idealab, has put plans on hold for a $115 million IPO.
Check out The Standard's Dot-Com Layoff Tracker for a look at which sites have cut workers or closed up shop. Also, e-mail any tips on layoffs or closures to layoffs@thestandard.com.
