Kozmo is online store and delivery service. For urbanites, Kozmo.com was cool and convenient. You could order a wide variety of products, from movies to snack food, and get them delivered to your door for free within an hour. It was the perfect antidote to a rainy night, but Kozmo learned too late that its primary attraction of free delivery was also its undoing. After expanding to seven cities, it was clear that it cost too much to deliver a DVD and a pack of gum. Kozmo eventually initiated a $10 minimum charge, but that didn't stop it from closing in March 2001 and laying off 1,100 employees. Though it never had an IPO (one was planned), Kozmo raised about $280 million and even secured a $150 million promotion deal with Starbucks.
Kozmo become failure the causes are:
(i) No Marketing Plan
There are millions of websites out there, with millions of potential customers. What will you do to drive sales to your site? You need to have a good marketing strategy. Which should include search engine optimization; pay per clicks, pop-under's, banner ads, and affiliates just to name a few.
(ii) Not Every Product can be Sold on the Internet
All products were not meant to be sold online. There are a lot of reasons why some products sell online and others don't. First, shipping costs for large products can became very expensive. Allot of time people shopping for shoes, and clothing prefer to try this items on before buying. Food items have the chance for spoiling, and fragile items are easily broken in shipping. You need to investigate a lot in the products you are selling before deciding to go online.
(iii) Specialization
Not every business can become an amazon.com right at the first. You will need to specialize in a certain product to build up a good reputation. Reputation is a key ingredient to have any clout in the online world.
(iv) Security
Making your site as secure as possible is a must. We live in a day an age were electronic theft and sabotage is used more and more. Protecting your customer's credit card information is vital. Another thing that is over looked when it comes to security is protecting your client's information. Such as e-mail address, billing address, phone numbers, and anything else that is required of them. Identity theft can come from this information as easily as credit card theft.
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