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Vancouver online shoe-seller declares bankruptcy

One-time Vancouver e-commerce star, Shoes.com, announced Friday it is ceasing operations and some or all of its companies will declare bankruptcy.
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Shoes.com storefront in Vancouver at 779 Burrard St.

One-time Vancouver e-commerce star, Shoes.com, announced Friday it is ceasing operations and some or all of its companies will declare bankruptcy.

The online shoe retailer announced in a news release that it is shuttering its three e-commerce channels: shoes.com, shoeme.ca and onlineshoes.com, along with its two brick-and-mortar locations in Vancouver and Toronto.

Employees were notified Friday morning, and have been paid through the end of the month, according to the release. As the company winds down operations and determines a process to liquidate assets, a few employees will stay on. 

It is an abrupt end for the private company that as recently as a few weeks ago was considered a potential candidate to be listed on the stock market through an initial public offering. 

However, the Vancouver Sun reported last September that the once high-flying company had fallen on hard times.

The retailer had been roiled by customer complaints, allegations of unpaid bills and big reductions in staffing. 

Dozens of employees were laid off last summer without notice in Vancouver, Burnaby and Seattle, whittling the company down to about 230 people, from the nearly 650 reported a year earlier in The Sun.

Two legal claims were filed this summer against the company, including a B.C. government suit filed in July, claiming $119,274 in unpaid provincial sales taxes. Swim Recruiting followed up in August with a lawsuit over $58,677.95 allegedly owed for the services of a contractor. Swim Recruiting was eventually paid.

Two more lawsuits were filed in January, including one launched this week by Richmond-based supplier Colton International which was seeking more than $126,000 in unpaid bills. Vancouver software outsourcing company Optimus Information  has also filed suit for $131,190 plus interest for unpaid invoices.

When Bradley Wilson was hired as president last September, he acknowledged that the customer experience, with long hold times and unanswered e-mails, was an issue for Shoes.com. He was hopeful of turning things around.

“Yes, I’m of aware of that. Yes, we’re addressing it,” Wilson says. “The one way to safely guarantee that you can be a popular brand, a meaningful brand, one with very healthy business margins, is to just serve the customer correctly.”

Vancouver retail analyst David Ian Gray told The Sun last year that selling shoes and clothes successfully online requires a deep knowledge of fit and style.

“At the end of the day, they’re in the fashion business,” Gray says. “But if you look at who’s really running these companies, they tend to be technology-first types.”

In addition to its internal struggles, Shoes.com was facing more headwinds as retail giant Walmart bulked up its e-commerce muscle with the acquisition of online competitor Shoebuy.com earlier this month.

From humble origins in a Dunbar basement in 2012, the company expanded rapidly after co-founder Roger Hardy sold his Clearly Contacts business and turned more of his attention to Shoeme. Hardy could not be reached to comment for this story.

The retailer went through a massive expansion in the next four years, acquiring U.S. e-commerce sites Shoes.com and OnlineShoes.com as well as the lifestyle brand Richer Poorer. Its online sales totalled $223 million US in 2015, according to Internet Retailer, up from $89.2 million in 2014. A year ago, it was on the hunt for $25 million to $50 million in capital to buy even more companies.

Former Expedia general manager and Shoes.com president Wilson also said that the company’s rise was exceptionally fast.

“The stuff that they undertook were really, really ambitious,” he said. “Big companies, such as Expedia, took on a level of commitment near that, but there’s thousands and thousands of employees.

“You can always second-guess. If you’ve got the opportunity to grab at the assets and you’ve got a vision on where you’re taking it, then it’s probably something I would do as well.” 

with file from Bethany Lindsay