I can’t say we didn’t see this coming. Quirky online gift catalog site Red Envelope filed for bankruptcy on April 17, according to an SEC filing. Its assets will be purchased by Creative Catalogs in exchange for $5.7 million and the assumption of debt. Red Envelope is also getting a $4.5 million debtor-in-possession line of credit from Creative Catalogs and Granite Creek FlexCap.
Two weeks ago, Wells Fargo terminated Red Envelope’s last credit lifeline, and it started to lay off employees. This could be an early sign that other e-tailing sites may be hit hard by the economic slowdown. Or it could just mean that Red Envelope was poorly managed. Either way, Red Envelope will not emerge from the deadpool.
If anything e-tailing will be helped by the economic slowdown, as people will begin to turn to it more for savings.
There is no gas cost for going to a website, and currently there is no taxes, though that could change. People already turn to the internet to find deals and pricing before they go to brick and morter stores, it seems much more likely now that their transactions will also be completed on the internet.
Amazon is doing something very smart by offering its Amazon Prime service, which is 79.99 a year and you get free 2 day shipping on all products, and 3.99 for next day. This will help reduce the final barrier to deeper adoption by consumers, which is the cost and delay of shipping.
I signed up for it myself as a trial membership and I am finding more and more uses for it to send me shaving blades and other small items that most would not look to the internet for. It seems highly likely that this was an issue of mis-management.
Is it just Chapter 11 (as in they can continue trading) because the website is still live and taking orders.
Too bad they couldn’t figure it out. I still need help buying gifts…
Wow…I guess a nice clean site does not guarantee anything.
Money Talks, BS Walks.
/story
Too bad–I’d occasionally buy gifts there.
Another one bites the dust in ‘Silly Con Valley”!
It’d be cool if we have a quick, structured way to check which commenters were right/wrong about the fate of a particular company. of course, that would require that TC covered them in the first place. same idea as holding stock analysts accountable.
@HA
Let me guess, you work for a big record label…
If a tree falls in the woods, and no one in the entire world gives a hoot about said tree… does it matter?
RedEnvelope’s failure is an individual case caused by management incompetency, I believe, not reflective of Internet retailing in general which is thriving by most metrics.
RE has a great brand recognition and is one of the leaders in upscale gift space so, new owners made a good decision to acquire its assets.
How come Red Envelope isn’t in crunchbase?
Don’t think you can say that it’s is in the deadpool. Seem’s like they try to keep it going.
I can see it coming as well. I bought an item from them awhile ago as a gift and it was nothing special, either in term of service, quality or pricing. They fit into a very small niche with a limited growth. They do have a decent brand equity though.
I have shopped there several times, and while it is a good upscale gift site, I think their custbase may not be a good one for the product.
With quality products that can be facsimilied easily and sold tons cheaper on other sites, or in smaller storefronts, they might have done better to expand their inventory to include either some cheaper semi-erotic, and maybe even pure novelty products, it might have helped.
Read the press release carefully. As the guys from Monty Python would say, “Not quite dead yet.”
“We believe the sale will strengthen the Company and foster a sustained turnaround for RedEnvelope. We expect to proceed quickly with the sale and the related bidding process and that the business will have a significantly improved balance sheet, greater operating flexibility and a path to profitability.”
oops here is the link for RE’s press release
http://www.shar...eleaseID=305473
they may continue but they will lose the trust of many of their current customers due to the bankruptcy filing. Also, if you look at the company who is attempting to buy them, Personal Creations, it’s clear that they are a rather lower end gift company and may not want/be able to keep the Red Envelope focus on higher priced and more unique items.
But I agree that the business is still strong (with some challenges to margins due to economic issues) so it could be that their management was what caused them to crater.
http://www.pers...ns.com/home.asp
Asad: Re: “and currently there is no taxes” – actually a customer of an e-talier will not pay sales taxes only if the vendor does not have a tax nexus in that state. For example, Amazon customers in California don’t pay sales tax on Amazon goods as Amazon does not have offices in California. Amazon customers do pay sales tax in Washington state as Amazon’s HQ is in Seattle.
Ironic… They don’t seem to have any relation with Red Letter Days in the UK, but that was a company that truly screwed its customers over, originally owned by a Dragon’s Den investor, Rachel Elnaugh, and was then bought out by two fellow Dragons.
Total load of bollocks, they left customers and suppliers completely out of pocket – hopefully Red Envelope will have an inkling more respect for their users.
Don’t you have to be dead to go into deadpool?
They definately had some neat gifts but everything seemed way overpriced. I’ve started ordering some really unique personalized gifts from http://www.Pers...izationMall.com because their prices are much more reasonable.
My take is that Red Envelope was too big, and less responsive to fast market and economic changes. Yet you guys are right, people still need to buy gifts. For gourmet foods, chocolates, etc… I turned to http://www. Savorique.com. What do people do for other categories?
I think this is a company that has completely fallen victim to poor leadership. 3 years ago they had items that were mid-range priced and incredibly unique. I read an article a year or two ago that they had started to lose money and they thought the fix would be to carry more expensive items. That would be fine if the items would have been of more value however, they took the same quality of items and jacked up the price which was completely ridiculous. I suppose they thought customer’s wouldn’t notice?! That coupled with their extremely poor selection of fall and Christmas items last year did them in. Too bad it WAS a great company and a fun idea while it lasted…
I like the comment by Eileen #18. The only thing she didn’t know is that the Personal Creations executives know both high end and low end. They ran Hammacher Schlemmer back in the 1990’s and I would say that Hammacher was high end Marketing. An article said that they had an astute group of managers.
I saw the website on Personal Creations and thought that they had much more variety of personalized products then Personalization Mall or Red Envelope. Check it out and see what I mean. http://www.pers...alcreations.com
I wanted to let everyone know of a nother little Gift site that is really beging to see more & More Press. It is http://www.GiftsForYouNow.com
They have gone back to the basics of Great High Quality Service and great Personalized Gifts. There Personalized Gifts are Similiar to both Personal Creations & Personalizationmal. All of the Gifts at GiftsForYouNow.com are priced lower than the others. They also offer FREE shipping on all orders over $50
Apparently this site http://www.bestartplace.com is improving the way of personalization. It allows you to knit you own photo in a throw. There are some other great gifts too.
I get so many catalogs in the mail before the Holiday Season (Red Envelope being one of them) that I won’t miss one less catalog this year. Actually, I prefer to shop on line at places that don’t send catalogs (save a tree). You can get an abundance of great personalized gifts from http://wealthwood.com Free ground shipping on any order over $50.
It seems a lot of companies are going bust lately, I do think it is always best to pay by credit card, not all people may know this but you can make a claim against your credit card company in the even that a business goes bust and you have not received the goods that you have paid for.
Another on-line gift site to add tot the collection here is http://www.pers...dgifts4all.com/
just read about RE, too bad. I love personalized gifts. that is why I recently started an online store check it out: http://www.thep...alizedtouch.com
I’ve been looking at the other sites offering gifts, and it seems to me if you narrow it down to couples gifts as a niche it is a lot easier to keep the site competitive by simply providing a romantic gift that people are looking for