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Let me begin the topic by refreshing what e-commerce is all about. E-commerce is stand for Electronic Commerce which consists of the buying and selling of goods or services through internet and other computer networks. Nowadays, the growth of the amount of trade has increased dramatically with the widespread of Internet usage. Due to the growth of e-commerce, many companies are struggling to develop their own websites to promote their products and services online.
There are a few virtual e-commerce companies which are very successful, such as eBay, Amazon.com, E-trade and others. Nevertheless, there are also large numbers of e-commerce companies that failed to maintain their business through the Internet. These companies are such as IBM, eToys, Boo.com, Webvan and so on. Here, I will briefly describe on another example of e-commerce failure and its causes to the failure.
MetalSite is commonly known as the pioneer of e-commerce metals. MetalSite which started up by Patrick B. Stewart in year 1998 was primarily focused on easier access to buy and sell metals through Internet tools. The vision of MetalSite is to transform the traditional metals supply chain into a fully networked value chain by adding capabilities such as online logistics, credit services and more. This includes tools that support transactions at each step which are from inquiry through settlement and delivery.
However, its website is now blank. It has suspended its operations since 6th June 2001 and its last few dozens of employees have left the firm for their own good at 15th June 2001. Below is the Link of the website which is blank.
MetalSite
It was perhaps the most surprising failures for the metal industry as they have investment backed from Bethlehem, Weirton, LTV, Steel Dynamics, and Ryerson Tull. MetalSite appeared to be successful even the Internet Capital Group also thought so and invested over $100 million in MetalSite.
The main cause of MetalSite’s failure was run out of cash. The costs of financing MetalSite’s technology and employees was impossible to justify, as a result, the firm actually burned over $200 million without generating any significant revenues. Secondly, MetalSite had numbers of backers who could commit product to their platforms which causes split ownership structures to exist. As an effect of the structures, quick decision making is inhibited. Besides, it also deterred non-equity participants from buying and selling over their platforms. Lastly, MetalSite held marketing campaigns which are costly to establish brand recognition which is actually a wrong decision which leads to its failure.
In a nut shell, firm must be good in financing the development of the websites so that it wouldn’t be suspended for the reason of lack of cash. On the other hand, the design of the websites is important to attract customers, this including the attractiveness of the features, ease of use and access and also convenience to view all kind of options. Brand recognition is equally important as having management with expertise to run the operations, e-commerce winners will have both well managed.
The followings links show some of the e-News on the MetalSite incident:
* Networking with Suppliers and Customers
* MetalSite: "It was overhyped by everybody"
* New owner brings MetalSite back online
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Phaik Yin,
Week 3
2 comments:
Back in the year 2000 where most organization believe e-commerce is a whereabouts for new opportunity and revenue input, they tend to overlook the importance of properly structure their financial needs for website. Although its almost 10 years since the incident, MetelSite is truly a lesson for all young entrepreneur who want to venture in e-commerce business to plan everything intelligently.
Ya,people should learn from the failures. It is a lesson to all of us,so is for MetalSite,they sure will raise again one day.
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