In October, job cuts advanced by 5,677, a new record for a single month and the fifth consecutive month of increases, according to the research of Challenger Gray & Christmas. It added that 22,267 dot.com job cuts have been announced since December, 1999, when the firm began tracking such data. 16% of all dot.coms reviews failed since last December.
Services, such as consulting, financial, and information, suffered the most cuts since December. Retail was second, health and fitness third.
Viewing the state of dot.coms from the perspective of the CEO and the employee, John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said:
“The upcoming holiday season is bearing down on the B2C [business to consumer] dot.coms. Heading every dot.com CEO's priority list is the need to generate enough paying customers to hit critical mass. Both investor and employee concerns are centred on ‘turning the corner’ - reaching a point when the business turns profitable. Many of these new companies will fail and disappear. Some will be acquired by traditional companies hoping to integrate an e-commerce presence quickly into their current operations. Others will be purchased by leading companies hoping to build enough revenue to get over the hump.
“The 3.9 unemployment rate offers B2C dot.coms some hope. Traditional retailers may soon be in a panic to find people. Customer service will suffer and shoppers may turn to the Internet. The smartest e-commerce companies have diligently built their internal operations to handle the holiday order flow. Happy customers who find the product they need at a reasonable price, and receive it through the mail promptly, may finally become ‘sticky,’ loyal longer term customers.
“Dot.com employees are becoming increasingly restless. Stocked refrigerators and pinball machines cannot continue to serve as an antidote to long hours and poor pay. Holding on to talented employees at levels other than the very top is becoming almost impossible. Attracting old economy business-building experts is getting tougher and tougher. The worst of the shakeout, especially in the B2C area, may very well arrive with the holiday season, but the strongest companies will later prosper as consumers find it easier to identify the long-lasting brands.”
Troubled on-line music retailer Boxman.com is one of the most recent European casualties. It failed to find a buyer for its business and laid off its 120 staff on Monday of this week. The company said it was put out of business by the unexpected "violence of the market downturn".
In the US, Stamps.com, an internet mailing services company, announced this week that it is cutting 240 jobs in an effort to reach profitability.