Living.com, a major on-line furniture and home products retailer
based in Austin, Texas, announced this week that it will file for
bankruptcy and has laid off 275 employees. On-line retailer
Amazon.com held 18% of the shares in the company.
"The decision to close our store was an extremely difficult
one," said Shaun Holliday, living.com's chief executive officer.
"We assembled a world class employee team, first rate partners and
investors, and top tier suppliers. Our web-site is considered the
gold standard in Furniture and Home Furnishings on-line. Despite
our employees' tremendous efforts and the loyalty of our customers,
the recent downturn in the capital markets has substantially
impaired our ability to raise the capital required to achieve
profitability. After exhausting all apparent alternatives, we have
no choice but to file Chapter 7," referring to part of the US
bankruptcy code that signals the immediate demise of a company.
The collapse also affects Amazon.com which was both an investor
and a “trusted partner” of the failed company. Amazon.com had just
three months ago added a link from its site to an Amazon.com and
living.com co-branded site for “home” products as part of its
expansion into new retail markets.
Amazon also recently linked up with Toys R Us, a successful
bricks-and-mortar company with a struggling on-line venture, to
sell toys and baby products. Amazon’s most recent financial results
showed that its investments in companies such as living.com were
costing over $100 million per quarter. The bankruptcy of living.com
will be seen as further evidence for Amazon’s critics who suggest
that the retail giant will never show a profit. The editor of US
magazine Red Herring, seen by many as an authority on e-business,
recently described Amazon as a “terrible company”.
Coffee retailer Starbucks, another investor in living.com, has
warned its own investors that it will have to write-off its $20.6
million investment in the company.
