Earn Cash Back at Karmaloop
At one time, Karmaloop was an go-to place for young, cutting-edge fashionistas looking for streetwear. As a cultural force and cultural touchstone, brands vied with one another for access to Karmaloop’s audience – making its early investors very wealthy while revolutionizing how e-commerce sites conduct business. However, now it seems more like “a dog with fleas,” to use Gordon Gekko’s words from Wall Street as their slogan.
Beginning with an inadvisable business decision, an attempt was made to increase revenue through offering massive discounts of 40% or greater. While such tactics might work initially, over time they end up trading off good customers with customers who purchase only for promotions – an irreparable setback when the retailer becomes too promotional and begins losing customers, and its financial picture suffers accordingly.
Another challenge faced Karmaloop was in how they paid their suppliers. Instead of paying brands or vendors directly for merchandise, the company hired middlemen to ship orders directly to customers; then charged Karmaloop an administrative fee to process and ship each order – an approach which proved costly and inequitable over time.
Karmaloop was soon after hit with numerous lawsuits from creditors and suppliers owing millions of dollars in debts, prompting it to file for Chapter 11 bankruptcy protection in March – becoming the highest profile e-commerce company to do so before other big names like Wet Seal and SkyMall filed bankruptcy protection.