BUSINESSWEEK ONLINE : DECEMBER 18, 2000 ISSUE
INFORMATION TECHNOLOGY Fingerhut's Avalanche of Errors Federated Department Stores acquired Fingerhut in February, 1999, in hopes of using its Internet and catalog expertise to boost Federated's fortunes. Since the $1.7 billion buy, plans haven't worked out. Overblown Expectations Federated planned to use Fingerhut's Net savvy to boost its overall Internet sales to $2 billion to $3 billion by 2004. With Federated's total Net sales expected to hit just $180 million this year, it's clear that was way too optimistic. Troubled Web Sites With visions of becoming a larger Web retailer than Amazon.com, Fingerhut launched eight sites, including auctioneer AndysAuctions.com. But Federated pulled the plug on most of the sites in October. AndysAuctions is being closed, and four other sites will be folded into fingerhut.com. Faulty Fulfillment Because of its expertise in filling catalog orders, Fingerhut thought it could provide warehousing and distribution for other e-tailers. It won fulfillment contracts with 22 companies, including eToys and Walmart.com. But e-tailers complained of slow service and poor inventory controls. Only eight fulfillment contracts remain. Bad Debt After Fingerhut made it easier for its traditional catalog customers to use credit to buy goods, its unpaid debts soared. Federated disclosed in July that higher reserves to cover bad debts will reduce its earnings this fiscal year by $350 million to $400 million. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Federated's Fingerhut Fiasco TABLE: Fingerhut's Avalanche of Errors INTERACT E-Mail to Business Week Online

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