When anything fails (even a business) a suitable excuse is found (maybe a story that executives can sell to investors). If you were there then sometimes you know what the actual hidden reason was (often an intersection of multiple causes).
It's a human pattern for businesses to discover a strawman, build a story about that strawman, then share that story widely.
Not saying the above answer about pets.com is wrong - just that in my experience you need to be cynical enough to ignore the story and then resourceful enough to find a better causal reason.
Edit:
Scaling is NOT given as a reason. "Despite only earning $619,000 in revenue, the business spent more than $70 million on advertising and marketing", "the company sold its pet products under their original purchase price", "bulk items like dog food were expensive to ship".
I guess another reason is that people make up stories like blaming scaling?
I'll make one up: Amazon owned 50% of pets.com and Amazon encouraged it to fail.
"Didn't have the cashflow" sounds more like lack of investment / loans, but I agree, explosive growth that catches you unready can happen. It seems to be an exception rather than the rule though. But everyone strives to be an exception, I know :)
You hire your sales team for their infectious enthusiasm. Then they get some momentum going and you don't want to try to stop that momentum, but now they're bringing you so much fame that it's now tipping into infamy.
And every time you ask them to slow down, they tell you a very convincing story about why if anything we should be going faster.
I worked for a small consulting shop where the founder was one of these people. I had to try three times over about 2 years to quit. The last time I just kept talking over him like a priest doing an exorcism and shoving my 2 weeks' at him.
It's a human pattern for businesses to discover a strawman, build a story about that strawman, then share that story widely.
Not saying the above answer about pets.com is wrong - just that in my experience you need to be cynical enough to ignore the story and then resourceful enough to find a better causal reason.
Edit:
Scaling is NOT given as a reason. "Despite only earning $619,000 in revenue, the business spent more than $70 million on advertising and marketing", "the company sold its pet products under their original purchase price", "bulk items like dog food were expensive to ship".
I guess another reason is that people make up stories like blaming scaling?
I'll make one up: Amazon owned 50% of pets.com and Amazon encouraged it to fail.