January 05, 2001, 2:12 PM — Furniture.com Inc. today became the latest online retailing casualty, announcing that it's discontinuing operations after failing to find needed new financing.
The shutdown by the Framingham, Mass.-based seller of furniture and home furnishings occurred less than three months after online rival Living.com Inc. in Austin, Texas, closed its virtual doors because of a similar lack of willing financial backers. And it came just five months after Furniture.com said it had raised $27 million in funding from a group of venture capital investors.
But in today's announcement, Furniture.com noted that it was having "difficulty securing sufficient capital to fund operations going forward." As a result, the retailer has stopped taking orders on its Web site and is immediately laying off 76 of its 88 employees. The remaining workers will stay on to manage the shutdown and to try to sell off the company's assets, Furniture.com said.
Furniture.com had revenue of $22 million in the first nine months of the year, more than twice its intake for 1999 as a whole. Company officials didn't return several phone calls seeking additional comments on the closure decision.
But a spokeswoman at CMGI Inc.'s venture capital affiliate in Andover, Mass., said the online retailer suffered from a problem that has befallen many other e-commerce start-ups: poor back-office and product distribution systems.
Those flaws hurt Furniture.com's business and contributed to the unwillingness of investors such as CMGI to pump more cash into the company without any profits on the horizon, the spokeswoman added. The CMGI venture-capital unit has had a seat on Furniture.com's board of directors since the online retailer was launched early last year.
In its announcement, Furniture.com said deposits and payments made by users of its Web site had been placed in an escrow account since late May "in order to safeguard availability of the funds for refund." An escrow agent working for the company plans to contact customers within the next 60 days to tell them how to submit refund claims, it added.