Startup Cemetery

A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.

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Totsy

E-commerce selling prenatal care products

General Information
Category
e-Commerce
Country
United States
Started
In 2009
Business Failure
Business Outcome
Shut Down
Closed
By 2013
Cause of Failure
Poor Product
Founders & Employees
Number of Founders
Two
Name of Founders
Christophe Garnier, Guillaume Gauthereau
Number of Employees
Between 51 And 100
Funding
Number of Funding Rounds
4
Total Funding Amount
$29.5M
Number of Investors
4
Description

Totsy, like other online shopping platforms, became widely known and used by millions of users during the era of the economic recession which brought a sudden, severe and prolonged fall in the price, value, and amount of goods. This flash sale company’s policies were extremely popular with the customers at the time, because they offered high-end fashion brands online for a low-price. They stored and sold the same fashion accessories and apparel which official stores were unable to sell for the regular price.

Cause of Failure

Ever-changing circumstances were involved for the most part in the collapse of this online retailer of high-quality and branded apparel that had a luminous moment in unstable financial times.

In order to cope with the recession and maintain their position above the margin, manufacturers started to sell their stored products at heavily discounted prices, this provided online flash sell companies with the perfect momentum to rise and thrive. Once the economy started improving, though, and customers regained their purchasing power, flash sales marketplaces started seeing a steady decrease in sales. At the same time, luxury brands rapidly recovered from the previous economic crisis and continued once again to produce their high-end product. Manufacturers decided to not let their high-end brands sell for bargain prices anymore and abandoned the idea of participating in flash sales in order to maintain their reputation and stable income. This meant that flash sales lost their core attractiveness and became generally obsolete. The momentum ended and so did the future of the company.

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