| Does anyone have insight into why this happened? The guy who took Costal Contacts public buys Shoes.com and two existing shoe businesses. The business experiences revenue growth and raises $45M. https://www.internetretailer.com/2015/05/21/shoescom-raises-... Suppliers start having trouble getting paid. The business announces a hiring spree.
Four months later, they shut down. This is manic. If you can build a company and take it public, make what looks like a solid set of moves to get into a nice position and grow that position in revenue terms - what went wrong? What is the lesson? I'm assuming the CEO knew the ropes, perhaps not? Seems unlikely. I suspect their top line was good but their margins were negative. That, something out of left field or foul play of some kind. Its noted they had lawsuits pending, which I suspect relate to collections. I know that walmart recently purchased shoebuy. So shoes.com's competition, already stiff, may have been overwhelming. Even so, wouldn't you wind it down then? |
- Their prices were not competitive. Some brands sold for at least $60 more than the MSRP found on other sites. I don't think even Zappos could've gotten away with similar premiums – despite their renowned customer service – which according to reviews and articles, ShoeME did not have.
- They were a drop-shipper so every item had to first travel from the supplier, to ShoeME's warehouse, THEN express shipped to the customer. Shipping from their Vancouver warehouse to Eastern provinces may have cost up to $40. Drop-shipping can add over a week to delivery time depending on how responsive your supplier is. Frustratingly, ShoeME did not make this their drop-shipping transparent and would instead send you an email about the delay AFTER you had ordered.
- Fakes sales. There was never a day without a sale banner, popup, or email blast claiming 30-40% off. The moment a "last chance" sale ended, another one was put on the next day. In reality many brands were permanently excluded from the promotions. Consumers catch on quickly, especially in the online world.
- In the past year and a half, ShoeME started buying their own inventory for some brands so they clearly thought they were getting somewhere. However, anyone who has run a shoe store knows how hard it is to keep size runs full. Some styles may sell well one day, and you may not sell another pair for a few weeks. I wonder if they had enough data to anticipate customer demand without stocking too much.
- They also started work on a supplier portal which never got off the ground. While working to integrate with them starting in mid-2015 them, we constantly received incorrectly setup credentials, changing representatives, and no updates whatsoever.
- Returns. It's no secret the return rate in the shoe industry can exceed 25%. I can imagine how sprawling ShoeME's warehouse must've been considering the hundreds of brands they sold. How do you even organize all the one-off returns from different styles and manufacturers?
This announcement pretty much caught us off-guard this afternoon, although retrospectively you can see some customer service issues regarding lack of transparent drop-shipping and dishonest pricing and sales. Personally, I thought they were too big to fail and always questioned the sustainability of their constant sales and pricing.
I feel sorry for the customers who still have outstanding orders with them. Websites are all down. They're social media pages have posts from just a few hours ago so I guess many were blindsided. This is like FutureShop's sudden closure all over again.