July 12, 2001, 12:00 AM

The worst may be over, says Webmergers

B2C web sites are declining as a percent of dot-com failures, says Webmergers.


With the collapse of Webvan this week, the worst may be over in the shakeout of e-retailing sites, says Webmergers.com, a company that follows M&A; activity of Internet-based companies.

“A new analysis of our shutdown data suggests that Webvan`s collapse comes at the tail end of the shakeout in big go-for-broke business-to-consumer e-retailers,” says Webmergers. “Webvan, which was one of the best-funded of them all, may have survived this long simply because it had more gas in its tank than most dot-coms.”

Webmergers says that b2c e-commerce companies--almost all of them e-retailers--shrank to 26% of total shutdowns in the first half of this year vs. 43% for all of last year.

“Consumer-oriented properties in general declined from 73% of shutdowns in 2000 to 49% in the first half of 2000,” says Webmergers. “It all suggests that the worst may be over for the b2c sector.”

Webmergers says the shutdowns shared these common characteristics:
- Going-for-broke play, rather than building incrementally;
- Building from the ground up, as in the case of Webvan, which proposed to start from scratch and spend about $1 billion building warehouses in 26 locations, rather than partnering with providers of existing infrastructure;
- Dealing with inappropriate product sets or business models, such as those with low margins, that are difficult and expensive to ship, or that are hard for customers to evaluate online.



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