Commentary: The Death of an Icon
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For sale: One sock puppet icon. One of the saddest things about the demise of Pets.com is the loss of an advertising icon that made me smile every time I saw it. I had similar feelings for those Budweiser frogs before they took a leap into obscurity. Perhaps the sock puppet and frogs will resurface in another business plan one day and be able to enjoy mascot success elsewhere.
As for Pets.com itself, did anyone really think the Internet needed six or seven stores selling dog food and cat carriers?
This week the high-profile online pet supplies retailer gave it up, announcing that it will lay off 225 of its 320 employees and sell the majority of its assets, including inventory, distribution center equipment, URLs, content and yes, its Sock Puppet brand icon.
Ironically, just last week the Talking Sock Puppet made its first appearance at FAO Schwarz in New York. The hypesters modestly compared the event to the Beatles' first arrival in New York.
The hoopla was to introduce the $25 Talking Sock Puppet, which was (and I emphasize the word WAS) to join the Pets.com line of Sock Puppet toys, T-shirts, and paraphernalia "just in time for the holidays."
Well, I guess that got Grinched. Too bad they could not have become successful just by selling sock puppets. They were wildly popular and the commercials were absolute gems.
Just last July, Advertain On-Line Inc. conducted a poll that found that the Pets.com Sock Puppet was the Best Mascot, beating out Tux the Penguin of Linux.com and Jeeves the Butler of Ask Jeeves. The adorable puppet secured 52.2 percent of the votes en route to soundly trouncing Tux's 37 percent and Jeeves' 10.2 percent.
It's unfortunate, and rather telling that the most memorable thing about Pets.com was its advertising campaign, created by TBWA/Chiat/Day Advertising, and featuring the puppet interacting with pets and a delivery driver while singing formerly popular tunes.
Pets.com reportedly spent about $27 million on its 1999 advertising campaign.
When the company started selling cuddly off-line versions for $19.99 each, it sold a quick 10,000 in a couple of days, according to Advertain.
Anyway, today the site bears a notice that says: "We will cease taking orders effective November 9 at 11 am PST."
Pets.com, whose stock had slipped from a 52-week high of $14 to a Tuesday close of 15 cents, has been aggressively and successfully seeking capital.
I love the way these announcements are worded, by the way. Pets.com, in putting out a news release on its own obituary, referred to itself as "the leading online pet retailer."
Julie Wainwright, Chairman and Chief Executive Officer of Pets.com, said in the news release: "It is well known that this is a very, very difficult environment for business to consumer Internet companies. With no better offers and avenues effectively exhausted, we felt that the best option was an orderly wind down with the objective to try to return something back to the shareholders."
Unfortunately (yes, I do have a heart and I hate to see all these folks out of work), the burn rate was just too much. Pets.com raised $35 million in its third round of funding in November of 1999, and had raised more than $60 million previously.
But according to a CBS.MarketWatch.com report, prior to June, Pets.com had about $37.2 million in cash. The trouble is, it burned through about $22 million of that in the second quarter. It was only a matter of time until the company ran out of money.
When they hired Merrill Lynch to help raise more capital or find a buyer, "no party was prepared to provide capital or acquire the company," according to the news release on the company's demise.
"In fact, out of the more than 50 prospects contacted, fewer than eight were even prepared to visit with the company."