The peril of focusing on Web content at the expense of sales
Who knew that health and wellness products cataloger SelfCare was in trouble? In fact, a number of industry observers were surprised by the Emeryville, CA-based company’s abrupt closing in December. But in hindsight, some say that the 25-year-old cataloger lost sight of its core business in favor of Web affiliations and ran out of cash.
The year 2000 started strong for SelfCare, which received $80 million in financing in March to fuel its Web partnerships. It made several deals and alliances involving such high-profile companies as NBC and ValueVision.
But by late fall, SelfCare was keeping a relatively low profile. Then in December it closed its doors and laid off its staff.
“SelfCare had a nice, growing business,” says John Lenser, a San Francisco-based catalog consultant. At its peak in the late ’90s, the company’s sales were estimated at $50 million. “But it undid the catalog business and poured millions into the Website,” Lenser says.
Craig Battle, a principal at Princeton, NJ, investment firm Tucker Alexander, agrees with that assessment: “SelfCare owner Jeffrey Rose tried to transition what he thought to be an unexciting business, catalogs, into an Internet-based strategy offering service, advice, and products for women,” he says. But emphasizing content and community not only was costly in and of itself, but it also apparently distracted from the selling of merchandise, no doubt hurting revenue.
Jirka Rysavy, president/CEO of multititle health and wellness mailer Gaiam, paid $3.5 million for more than half of SelfCare’s inventory, as well as its nontangible assets, including trademarks, names, patents, and customer lists. The Dec. 29 transaction resulted in a new company, called SelfCare Holdings. Calls to Broomfield, CO-based Gaiam were not returned.
At press time, SelfCare’s remaining $2.5 million of inventory was to be liquidated on its Website and through an auction, says Geoff Berman, vice president of Chicago-based liquidator and crisis management firm Development Specialists, which represents SelfCare’s creditors. The cataloger “executed a general assignment for the benefit of its creditors,” Berman says, which under California law is similar to a Chapter 7 bankruptcy filing, “but it’s not a public process.”