Egghead.com was an example of the e-commerce failure. It was a computer software retail company which founded by Victor Alhadeff in 1984. However, due to competition from mass merchandisers had forced the company to re-evaluate its strategy. In 1998, the company focuses online business, closing its retail shop and selling through Egghead.com website. After re-strategy the business, the company decides to sell its products via Internet, phone and catalogue. In 2000, the Egghead merged with online auctioneer OnSale.com. However, the company was hurt by December 2000 exposure that hackers had accessed its systems and potentially concession customer credit card data. The company gets into bankruptcy in August 2001. After a deal to sell the company to Fry’s Electronics for $10 million and its assets were purchased by Amazon.com for $6.1 million.
The main cause the company got into bankruptcy was the credit card heist. In December 2000, that a cyber-criminal had broken into its systems and customers’ information might be disclosed to public. However, the CEO of the company declared that private information wasn’t stolen during the infiltrated. In truth, the hacker might steal the credit card detail of 3.6 million customers from the Egghead.com network. Moreover, near the Christmas season, the handling of the breach by publicly refuse that there was a problem, then notify by Visa Company, who in turn notified banks and customers that the credit, caused the breach to rise into a full blown scandal. There Creditcard.com confirmed that its security was compromise when credit card numbers were posted on the web. There were processes credit transactions for online companies and posted some credit card numbers after a failed blackmail attempt. The FBI has been investigation the incident and found that was mysterious charges of US$10 to US$18 have been made on some of the cards by a Moscow based firm.
Secondly, Egghead was suffered a deep decline in sales and forced the bankruptcy filing and assets sales. Although Egghead had PC software sales experience than others retailers, they were nevertheless out-resourced and taken over by the publicly traded giant Amozon.com. Egghead lost $4.7 million on $59 million in revenue. Although the net loss was improvement from the $17.7 million the company loss in the second quarter of 2000, Egghead’s revenue was down 53% from previous year and decrease 29% from the first quarter of 2001. Sales were not enough to cover up the loss, sustain the business from the competitors and the company went into bankruptcy.
In my opinion, the Egghead had give some guidance the company which wish to launch e-commerce. The main concern when a company launch e-commerce website is the website should be design well. So the user can do not worry during shop online especially how safe is their personal information.
Related Link:
http://en.wikipedia.org/wiki/Egghead.com
http://www.internetnews.com/dev-news/article.php/10_543591
http://news.zdnet.com/2100-9595_22-112935.html
http://www.theregister.co.uk/2001/04/27/egghead_credit_card_hack_serious/
http://www.emergency.com/2000/cc-stolen.htm
http://news.cnet.com/Egghead-to-file-for-bankruptcy/2100-1017_3-271685.html?tag=mncol
http://www.ecommercetimes.com/story/6286.html
1 comments:
I think many the main causes of the failure e-commerce website will be its own management policy and the webasite security.
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