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EToys is not the only dot-com in trouble. EBags, MVP.com and Kozmo all have had recent lay-offs.
EToys was not the only pure-play online retailer fearing the grim reaper at the start of 2001. EBags laid off 25% of its work force shortly after the start of the new year. MVP.com kept laying off while staunchly claiming not to be on the brink of demise. Kozmo.com closed delivery in San Diego and Houston and laid off 120 employees. And both gift site Send.com and bargain site AndysGarage.com closed shop in January.
Greenwood Village, Colo.-based eBags passed out pink slips to 22 employees, one-fourth of its staff. The company cited a need to speed the path to profitability-enhancing prospects for additional financing in increasingly tough capital markets. The layoffs cut across all departments, leaving 66 employees. “The current climate, in terms of raising money, has gotten more demanding about getting to profitability sooner,” says Peter J. Cobb, vice president of marketing. “A move like this can extend the runway. “
EBags shipped its millionth bag in December after less than two years of operation. EBags, whose annual sales are estimated at more than $10 million, reported six-months sales were up 135% over the same period a year ago, rising on a marketing budget that was trimmed by two-thirds. Nevertheless, Cobb estimates sales would have had to have been up by an additional 50% to have avoided staff reductions.
Chicago-based MVP.com, the online sporting goods retailer headed by former superstars Wayne Gretzky, Michael Jordan and John Elway, laid off 36 more employees Jan. 4. In December, it laid off 79 when it closed offices in Boulder, Colo., and Austin, Texas, and consolidated operations at its Chicago headquarters. MVP’s staff now stands at 43.
MVP was looking for additional financing in late 2000, which the company says was in its original business plan. Despite rumors that the company is going under, a spokeswoman says, “We are still in business and taking and fulfilling orders.” The layoffs, she says, were a way to cut costs.