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Kozmo.com shuts down
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April 12, 2001: 6:49 a.m. ET
Online delivery service and retailer shuts down after failing to find a buyer
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NEW YORK (CNNfn) - Unable to deliver profits or a buyer for the company, online retailer and delivery service Kozmo.com has ceased operations four years after it was started by young Wall Street executives.
New York-based Kozmo, which delivered everything from movie rentals to specialty food to electronics in nine urban markets, said in a statement Wednesday 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, who recently succeeded its founders. "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."
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"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."
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Gerry Burdo
CEO of Kozmo.com |
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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, down from 2,000 at the beginning of the year.
Kozmo was once seen as a new method of delivery of online purchases that would grow to challenge established carriers such as United Parcel Service Inc. (UPS: Research, Estimates) or FedEx Corp. (FDX: Research, Estimates).
But losses never ceased and as the dot.com bubble burst, it was left without the financing it needed to survive. It had to withdraw plans for an initial public offering nine months ago, citing unfavorable market conditions. The company's proxy at that time said that it had seen losses $26 million in 1999 on revenue of $3.5 million.
Before the change in the market, the company received financial support from a number of high-profile venture capital funds as well as a $60 million investment from online retailer Amazon.com Inc. (AMZN: Research, Estimates).
Kozmo was founded in 1997 by two young Wall Street professionals, Joseph Park and Yong Kang. Park had been an analyst in the corporate finance division of blue-chip investment bank Goldman Sachs & Co., while Kang was an assistant vice president at Societe Generale in the media and communications group.
The company halted operations in San Diego and Houston in January, and said it was cutting 120 of the 2,000 employees it had at that time.
- from staff and wire reports 
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