E-commerce: A Case Study

Essay by PaperNerd ContributorUniversity, Master's December 2001

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Toysmart.com one of the biggest online children's toy, video games, software, books and music retailers went out of business last year. The company's website as of now consist only of one page stating what was there originally and eventually it will cease to exist as its owner.

Toysmart was primary controlled by Disney. The primary reasons for failure were rising shipping costs, rough competition and somewhat poor management. Fearing the company's demise many employees were leaving and some were laid off. To be exact Nearly 200 employees are out of work without any severance pay "" their dreams of turning stock options into easy millions quickly extinguished.

Disney's withdrawing its involvement was also one of the biggest reasons as to why Toysmart had failed. Disney wanted to compete with much stronger e-tailers such as Amazon. It was nothing but a futile attempt to kill a giant. Seeing that the competition was too steep, Disney withdrew their funding and Toysmart went tumbling down the hill of the economy, no resources to pay the employees or maintain the hardware used for their website.

Besides of all these problems, it was forced into bankruptcy by its creditors that saw the company failing and wanted to recover their investments. Because the collapse of such a vibrant and to all appearances, successful company took many of Toysmart's them by surprise. They didn't think a company backed by Disney could fail. Toysmart's collapse particularly hurt dozens of small businesses. One of them, a 10-person company "" Data Connections, located in nearby Wakefield "" afloat. Toysmart stuck him with an $85,000 unpaid bill for installing high-speed cable and fiber optics throughout its Waltham headquarters.

On top of all not only suffering from poor management during these hard economic times, Toysmart also suffered from poor judgment.