As a sign of the times, they don't get much plainer: Last week, Miadora.com, an online jeweler that launched a mere five months ago, took a look at Jewelry.com, a three-month-old competitor with a better name - and swallowed it whole.
And Miadora CEO Barry Gilbert is still hungry. "I think there are too many players" in the jewelry category, he says, noting that Miadora remains "very acquisitive."
The so-brief-it's-a-blip history of Jewelry.com as an independent company is only the latest example of a growing merger-and-consolidation frenzy in the crowded e-commerce field, where everything from online jewelers to college-textbook merchants to pet-supply stores face a glut of competition. Like Jewelry.com, the little fish are easy pickings.
"Just as in the offline world, you will have a couple of big players," says Sara Farley, an analyst with PaineWebber, pointing to the $25 billion pet-supplies market as a prime candidate for a shakeout. According to PC Data's statistics for January, the top four competitors - Pets.com, PetsMart.com, Petopia.com and Petstore.com - are among the top 40 e-commerce sites. The names are blurrily similar and the combatants are spending big bucks to stand out.
Pets.com, backed by Amazon and Hummer Winblad, distinguished itself last week with an underwhelming IPO. Now, its competitors are emphasizing how different they are - about the only thing they agree on is that a shakeout is imminent.
"My belief in good faith is there's not room for four," says Phil Francis, chairman of PetsMart. "There's room for one and maybe a secondary one."
Cosmetics face a similar landscape, with Gloss.com, Beautyjungle.com, iBeauty.com and a host of other sites. Beauty.com has already moved to protect itself: In January, Drugstore.com bought the site with about $34 million in stock. "My opinion is that anyone who's a standalone beauty company will not be able to compete in the future," says Roger Barnett, CEO of Beauty.com.
Seems his competition is thinking the same thing. Beautyjungle.com is planning to add a business-to-business component - an online marketplace that unites distributors and retailers - to enhance its prospects for an initial public offering. And some 800-pound gorillas have entered the market.
Consumer-goods giant Unilever (UN) announced last week that it's forming a $200 million independent e-commerce venture with iVillage.com a women's lifestyle site. It will compete with Reflect.com, the Procter & Gamble spinoff, as well as the standalone companies. "The weaker brands will probably disappear," says Jupiter Communications analyst Mike May, pointing to iBeauty and BeautyScene as two companies with little momentum.
Like pet supplies and cosmetics, the $100-billion jewelry industry is a party of Johnny-come-latelies, with a bevy of startups funded and launched in the latter half of 1999. But analysts had expected something different: A diamond necklace, after all, is an ideal retail product, offering exorbitant margins and minimal warehouse and shipping costs. That formula was expected to accommodate several competitors at different ends of the scale.
Accordingly, some retailers offer high-end gems (such as Miadora, Mondera, Tiffany.com and BlueNile.com), others sell more moderately priced fare (such as Jewelry.com and iJewelry.com), while some sell all of the above, plus accessories and cosmetics (Ashford.com).
Kenneth Kurtzman, CEO of Ashford, says his company spent $14 million in the fourth quarter and did $20 million in business. But not all of his competitors can say the same. "They have spent $20 million or $30 million on an ad campaign to attract $1 million in business," Kurtzman kibitzes, refusing to single out a rival. "That's just not sustainable."
Indeed, competition has already started to winnow the field, with Kurtzman doing some bargain-hunting himself. Last month, Ashford said it would acquire Jasmine.com, a purveyor of cosmetics. The acquisition gives
