n2N Commerce is shutting down before it ever got off the ground. Yesterday, Erick Schonfeld at TechCrunch broke the story that n2N has been dumped by its only client, Victoria’s Secret Direct (VSD). I was able to confirm this afternoon that Limited Brands pulled the plug and n2N is closing. Most of the staff was let go just before the holiday break.
One has to wonder how n2N could have burned through $30 million in just ten months, and before their first deployment. They had a jump start with the Demandware eCommerce platform and a top retail client with VSD. n2N management was short-sighted to put all their eggs in one basket and allow the burn rate to spin out of control.
A primary factor contributing to VSD’s pullout stemmed from issues at the new distribution center opened in Ohio last August. The new DC maxed out its throughput well below expectations. These limitations hamstrung direct sales and led to a massive loss in revenue.
Limited Brands posted a 48% drop in third quarter profit. So drastic measures were taken. Catalog circulation was reduced to control holiday demand; and Limited Brands said they planned to reevaluate “development of the new front-end technology systems at Victoria’s Secret Direct.” Just prior to launch, the new system failed to make the cut.
Goodbye n2N. We hardly knew ye.