While bankrupt Internet retailers shrivel up and die, the stuff they once sold is showing a surprising knack for sticking around online.
Increasingly, it’s turning up in other corners of the Web, where former rivals and bargain shops hawk the excess toys, computers and sports gear of the dot-com departed. Their ambition: to survive yet another holiday season.
“The only way to do it is to buy dirt-cheap,” said Patrick Byrne, CEO of Overstock.com, which buys and resells excess inventory from Internet and offline business.
So far, the company has purchased the wares of a number of failed dot-coms over the past couple of years, including Gear.com, jewelry sites Miadora.com and Jewelry.com, and furniture retailer GoodHome.com. It makes money by buying large quantities of inventory at cut-rate prices and passing on a portion of the discount to customers.
Overstock isn’t the only one this holiday season with a bumper crop of merchandise from failed Internet retailers.
KB Holdings, owner of the KB Toys retail chain and shopping site, recently revived once-dead website eToys.com in time for the end-of-year buying season. Earlier this year, KB purchased eToys’ domain name, trademarks and leftover toy inventory in a bankruptcy sale.
Another company taking a similar tack is computer and office equipment seller 4Sure.com. The company announced in January that it would buy the domain name and leftover assets of Computer.com, a 2-year-old e-commerce startup best known for blowing much of its investment capital on a Super Bowl commercial in 2000.
Sometimes, however, appearances are deceptive. In many instances, a company will acquire the domain name, trademarks and customer lists of a former competitor, but not its actual merchandise.
Such was the case for Net retailer eVineyard. This summer, the company participated in the bankruptcy liquidation sale of ex-rival Wine.com, but had little interest in buying the several million dollars’ worth of wine the company had left over.
Instead, eVineyard picked up the defunct company’s domain name, customer list and trademarks. It relaunched the site, but with its own network of suppliers, a far smaller staff and a retooled business model.
Although they bought a few bottles from Wine.com, eVineyard’s chief marketing officer, Brett Lauter, said the main plan was to capitalize on the tens of millions of dollars the company had spent on advertising and customer acquisition.
After all, like a lot of Net flameouts, Wine.com did a good job making sure that everyone had heard of it before it pulled the plug.
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