The move marks one of the first times an Internet-only retailer has fled the Web to concentrate on a brick-and-mortar business. Lucy.com Chief Executive Sue Levin said Thursday that the 1-year-old company has plans to open four new offline stores.
"We're sorry to have to do this, but it's clear that it's the best path for the company," said Levin, who declined to say when the new stores would open.
Last week, in preparation for the e-commerce closure, Lucy.com laid off 57 workers and will lay off another 12 next month, Levin said.
Not long ago, merchants poured big money into building Web stores. The popular belief in Internet circles was that by not having to pay rent or construction costs, online retailing would be cheaper to operate than land-based stores. Analysts and industry observers expected that shoppers would flock online.
While the number of online buyers has grown, Web merchants are only now discovering that operating an e-commerce store is often as expensive as running a brick-and-mortar operation.
In September, San Francisco-based Gazoontite.com dropped its online business to concentrate on its offline stores. The health site eventually filed for bankruptcy protection in October.
Levin said the amount of business the company was seeing could not pay the high costs of running the Portland, Ore.-based Web store.
"The Web site at volume would have been extremely profitable," Levin said. "Building a Web site is like building a large store. But you need volume to make the economics work."
Once the company's additional brick-and-mortar operations are underway, Levin said Lucy.com intends to return online but with a "much more cost-effective" model.
"We were born on the Web. We believe in the Web. We're going to get back on the Web."