January 4, 2001

4:54 PM

Etoys to lay off 70% of its workforce in their never ending quest for profitability. Does it really take 1,000 employees to run an e-commerce site? I hope not, since there will only be 300 left after today. I imagine most of those employees were in the fulfillment end of the business.
posted by mathowie (13 comments total)

"It's a good business," says eToys spokesman Gary Gerdemann. "The story's not over. We have yet to see the end.

Not for another couple weeks anyway. Boy, that guy's an optimist.
posted by waxpancake at 5:20 PM on January 4, 2001

...and I wonder how much the ETOY thing ruined their reputation?
posted by mathowie at 5:27 PM on January 4, 2001

I think hardly anyone was even aware of the etoy thing. certainly very few of their customer base. I'm not sure *that* many people in the industry knew.

*I'm* just glad that etoys didn't win that fight only to go under. (at which point, of course, netsol would have held the etoy domain hostage in order to auction it off to the highest bidder.) and perhaps if they *do* go under (not that I'm hoping for it or anything), it will be one more point in favor of the right of the non-corporate entity to hold a name that a corporation wants to control.

I hadn't thought of this before now, but the more of these shakeouts that occur, the more a web business will be seen for what it is: an ephemeral. this may ultimately work in favor of the non-commercial web as disputes are mediated.

rcb
posted by rebeccablood at 5:34 PM on January 4, 2001

etoys biggest blunder is employing 950 people. 950 people for a 2 year old toy store? Crazy.
posted by owillis at 5:47 PM on January 4, 2001

Why is 950 people for a two year old store crazy? On the conservative side, consider 400 in a warehouse and 200 for customer support and you have half of the amount right there. Add a couple of dozen web designers who read blogs all day and a couple of more dozen managers who spend the days learning the difference between Reply and Reply All. Add in HR, finance, marketing, etc. and you're well on your way to 1000 employees.

posted by gluechunk at 7:07 PM on January 4, 2001

In other words, yesterdays' dot-coms and those like etoys who are still hanging on is run like a government agency.
posted by tiaka at 7:32 PM on January 4, 2001

All business is ephemeral, Rebecca. We just agree that it's real.
posted by solistrato at 7:41 PM on January 4, 2001

Seems like a company like etoys should be able to outsource customer service and fufillment. They shouldn't have to be much but a web front end on a distribution operation. P-commerce! (P for Potemkin)
posted by rodii at 7:56 PM on January 4, 2001

Why is 950 people for a two year old store crazy? On the conservative side, consider 400 in a warehouse and 200 for customer support ... and you're well on your way to 1000 employees.

It's crazy because they have no money to pay those people with. Expanding at a rate like that when you only have ESTIMATES of revenues is very risky behaviour, to say the least. I've always learned that profit should come before expansion.

posted by Neb at 10:01 PM on January 4, 2001

This more than anything may be the reason why all the dotcoms are failing. Many of them recieved an infusion of finances based on their theoretical future success. The people holding the reins got dollar signs in their eyeballs and started spending, not realizing that historically it takes at least three to five years for any business to break even.

Rather than carefully rationing out the cash and be a slow burn over time, most dotcoms burned their cashflow too quickly, and are now dying like shooting stars hitting the atmosphere. Is 950 crazy? Probably seemed natural at the time for a company that was expecting expansion and growth, but had they cut their employees down to half that a couple years ago, they would have been able to last another two years. Now they'll be lucky to make it to the end of the first quarter. Business Management majors take note.
posted by ZachsMind at 11:44 PM on January 4, 2001

Dot-coms explode because that's the business model that people who have the money still think works, despite an abundance of evidence otherwise.

I'm getting tired of sounding like a broken record, all I've done this week is rant about how bad a business model blowing a company into a huge staffing nightmare in a matter of months is. I'm just waiting for the people who are tossing their money into them to figure it out.

A thought just popped into my head, analogizing the VC industry to the music industry, but it's rather ill-formed, so I'm just going to chew on it for a bit.
posted by cCranium at 5:51 AM on January 5, 2001

Well, in any case, more points for me. :)
posted by PWA_BadBoy at 10:46 PM on January 6, 2001