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TK's MORNING BUZZ: In the End, Kozmo Promised Much More Than It Could Deliver

13 Apr, 2001 By: Thomas K. Arnold

The fight's over, and the little guys have won.

Kozmo, the national delivery service that specialized in video and other home entertainment products, ticked the bejesus off brick-and-mortar retailers like no one else but Blockbuster.

Retailers saw Kozmo as an interloper, a twisted variant on video-on-demand that moved into their neighborhoods -- at its height, Kozmo delivered video in about a dozen major metropolitan areas, including New York City -- and sought to woo their customers with a sexy interactive Web site and promising them no more trips to the video store, either to rent or to return.

Retailers in Kozmo Kountry declared war, and did their best to hang on to their customers, but as many will tell you, it wasn't easy -- particularly a year ago, when Kozmo, flush with cash, offered incredible customer service, such as free delivery and no minimum order. A perfect fit for the pizza-and-a-movie set.

But in the end, Kozmo promised much more than it could deliver (pun intended). The red ink began to flow, an IPO was delayed and then killed, and before too long Kozmo was laying off workers and cutting back on service, including instituting a $5 minimum order and tacking on delivery fees for orders less than $30.

Of course, that only made things worse.

Now that it's all over -- after failing to clinch a necessary merger, the company April 11 announced it would cease operations and lay off all 1,100 of its workers -- surviving retailers are gleeful.

This from Marc Oringer, the owner of Champagne Video, who went head-to-head with Kozmo in the Big Apple:

"A very funny thing happened at Champagne Video today. Every store called me early this morning (April 12) to tell me the stores were packed and they needed help. Was it the rain, was it Easter recess and the carpet crawlers home from school?

"No. It was that Kozmo.com had just ended their three-year existence on this planet. As I approached the first store, by 11 a.m. customers were telling me that they had missed the in-store experience. It felt good to get out of the house and into a store with 15,000 videos to choose from, with no delivery charge. They actually missed the customer service.

"As soon as I heard the wonderful news I called my distributor, Flash Electronics, and asked if I could increase my orders for the next three weeks of the month. Steve Scavelli, Flash's owner, told me he had anticipated this a while ago and was already prepared for the onslaught of customers like myself.

"He gladly bumped my orders on the rest of the April titles. As of 6 p.m. today we are up about 15% in business that we probably didn't see because of online delivery. I expect this to increase to 25% over the Easter holiday weekend."

Happy Friday the 13th.

Comments? Contact TK directly at:TKArnold@aol.com

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