Why Early Ecommerce Failed (and What Survived)

Between 2000 and 2006, most digital commerce initiatives died.

Not quietly. Expensively.

I watched it happen from inside Nike, then later from Microsoft. Companies spent millions on platforms, teams, and ambitious roadmaps. Most of that investment produced nothing durable.

The failures weren't technical. They weren't even strategic, exactly.

They were structural.

And understanding why they failed taught me more about building durable businesses than any success ever could.

**The First Mistake: Treating Ecommerce as a Website**

Early ecommerce was almost always owned by marketing or technology. Not operations, not supply chain, not finance.

That meant success was defined narrowly:

Traffic. Conversion. Sessions. Click-through rates.

Those metrics felt sophisticated in 2002. They were seductive because they moved fast and looked great in board updates.

But they measured only the front door.

Behind the door, everything else was breaking:

Inventory systems couldn't update in real time, so customers ordered what wasn't actually available.

Fulfillment wasn't integrated, so shipping times slipped.

Returns had no process, so profitable orders turned into loss leaders.

Customer service had no visibility into what marketing promised, so calls escalated.

The website was the only part that worked.

And the website was the least important part.

I learned this slowly because I, too, was focused on the front end. Experience design was my lens. It took watching operational collapse to realize:

Commerce is not a screen problem.

It is a systems problem.

**The Second Mistake: Building What Couldn't Scale**

In fragile environments, there is pressure to prove relevance fast.

That pressure produces overbuilding:

Custom CMS platforms because WordPress wasn't "enterprise ready."

Proprietary checkout flows because off-the-shelf felt limiting.

Unique data architectures because no one considered integration with legacy ERP.

I watched teams build elegant solutions to problems that should not have existed.

The cost wasn't just development dollars.

The cost was time. Momentum. Credibility.

When those custom platforms failed under scale—and they almost always did—the business concluded that ecommerce itself was the problem, not the implementation.

I made this mistake too.

At one point, I advocated for a heavily customized front end that would "differentiate the brand."

It differentiated us straight into a six-month rebuild when we outgrew it.

The lesson:

Differentiation belongs in brand, product, and service.

Infrastructure should be boring.

**The Third Mistake: Ignoring Channel Economics**

Nike in 2000 was a wholesale company. Retail partners were not just customers—they were the business.

Direct digital commerce threatened that model.

The tension was real:

If Nike sold direct, would Foot Locker reduce orders?

If pricing was transparent online, would international distributors lose margin?

If inventory was allocated to DTC, would retail partners stock out?

Early ecommerce teams treated these questions as obstacles to overcome, not dynamics to respect.

That was naive.

Channel conflict does not resolve because you have better UX.

It resolves because you align economic incentives.

The initiatives that survived at Nike were the ones that integrated with wholesale, not those that competed with it.

The ones that died tried to bypass the system.

I carried that lesson forward:

At Chico's, omnichannel only worked when store incentives aligned with digital behavior.

At JCPenney, BOPIS succeeded when we fixed the operational reality, not just the marketing narrative.

At SelectBlinds, direct sales scaled because we never pretended we could ignore the manufacturing floor.

Channel economics are not a constraint.

They are the system.

**What Survived**

Looking back, the ecommerce initiatives that made it through that period shared three patterns:

**1. They integrated with operations early.**

The teams that spent time in distribution centers, not just design studios, built things that worked.

**2. They respected existing economics.**

They asked: Who wins and who loses if this works? Then they designed for the winners.

**3. They built for change, not permanence.**

They assumed platforms would be replaced, architectures would evolve, and today's advantage would be tomorrow's tax.

The survivors were not the smartest teams.

They were the most adaptable.

**What That Era Taught Me**

The dot-com crash reset expectations.

But the five years that followed reset something deeper:

They separated what was real from what was performance.

Ecommerce survived because it solved real problems:

Inventory that needed more efficient channels.

Customers who wanted convenience.

Businesses that needed better unit economics.

The hype died. The utility remained.

That pattern has repeated with every cycle since:

Social commerce. Mobile-first. DTC mania. AI.

The noise always fades.

The utility compounds.

When I later evaluated investments at Bodhi AI Fund, that lens became invaluable:

Is this solving a real problem, or just performing one?

Will this survive when capital tightens?

Does this integrate with how the world actually works, or only with how we wish it did?

Those questions came directly from watching early ecommerce fail and survive.

**For the Current Moment**

In 2026, the AI cycle is peaking.

Hype is high. Capital is chasing. Everyone is building.

Some of it will survive. Most will not.

The difference will not be the technology.

It will be the integration with how the world actually operates.

That is what I learned between 2000 and 2006.

And it has never stopped being relevant.

For recruiters and boards:

If you're looking for a CEO who has seen cycles hype and collapse—and knows what actually endures—I'd welcome the conversation.