E-commerce failure & its causes

There are many successful businesses emerged from e-commerce world such as Amazon.com and eBay but they are also many businesses closed down in E-commerce world. One of the good example for this e-commerce failure is Flooz.com, an e-currency company, which sells gift certificates that can be used for payment at selected online sites. Flooz.com was a venture based in New York that provides online currency in February 1999. The company earned their money through commission received from the users who used Flooz, the gift certificates as payment.

One of the reasons for Flooz.com’s failure is the fact that the gift certificates become worthless during dot.com recession where the consumers suffered a serious impact, they are losing their money.The merchants stopped accepting the currency in early August, when Flooz.com informed them that their Web site operations had been suspended. One of the co-founder, comic actress Whoopi Goldberg lost millions when Flooz.com closed down.

Another reason for Flooz.com’s failure is because of the purchase of Flooz by a gang of thieves using stolen credit cards in Eastern Europe and Russia region. Flooz.com’s cash flow broke down after a big amount of Flooz were purchased using stolen credit cards and at the same time, Flooz.com was under the obligation to pay online retailers who were still accepting Flooz as payment.