As if this were unexpected news…
Wednesday April 11 8:48 PM ET Kozmo.com to Shut Down Immediately, Lay Off 1,100
By Doug Young
LOS ANGELES (Reuters) – Online retailer Kozmo.com on Wednesday said it told its employees it is closing down, after the privately held company failed to find a buyer.
New York-based Kozmo said in a statement it is “ceasing operations in all nine markets and liquidating its assets. The closing is effective immediately.”
“Given more time and more hospitable market conditions, Kozmo would have succeeded in rounding the corner and would have continued to grow,” said Gerry Burdo, president and chief executive of Kozmo. “However, some decisions made early in the company’s development combined with current market conditions prevented Kozmo from overcoming the challenges associated with conquering the last mile.”
A worker at one warehouse run by Kozmo, a seller of food, household items and specialty gifts, confirmed that employees were notified today that they would be laid off.
The company’s Web site was not running Wednesday afternoon, and employees were told to come in to work at 10 a.m. on Thursday to receive severance checks, said one source who used to work as a consultant for Kozmo.
The company employed about 1,100 people at the time of the announcement.
Kozmo, which called off plans for an initial public offering last summer, had searched for a formula that would make it profitable. As part of that effort it was trying to attract a more upscale clientele that would purchase higher-end products that yield bigger profit margins.
The company known for its fleet of orange-suited bicycle delivery men said its average courier delivered 2.5 orders per hour in December, up from an average of one order per hour last July, a company spokeswoman said.
But despite the improvements, Kozmo shuttered its San Diego and Houston operations in January. It said earlier this month it would cut 90 jobs in its third round of layoffs since August 2000, leaving it with 1,100 employees.
Last month, Kozmo also announced the end of its five-year, $150 million deal to place rental movie drop-off boxes inside Starbucks stores.
Kozmo was launched in 1997 with the promise of free delivery of products ranging from candy, books and CDs to high-end electronics and luxury gifts. But after an ambitious roll-out it was later forced to lay off workers and institute a $5 minimum order and delivery fees for orders less than $30.