It's not really ecommerce. it's PE parasites selling the brand equity.
The article doesn't really mention: Authentic Brands Group, an asset-light PE org, bought it in 2021; a company called Outdoor 5 LLC now licenses Eddie Bauer's e-commerce and wholesale operations; and we're well deep into enshittification. You can find widespread complaints of bad product quality. Note that ABG wasn't the first PE company to own them, but they seem to have accelerated the enshittification / are doing a bust-out: turning them into a bottom-dollar contract manufacturer scam before people broadly realize the brand name no longer merits the quality reputation it has/had.
These brands are being bought by PE because their business models are under attack by low-cost competitors on one side, and e-commerce on the other. They no longer have a way of differentiating themselves and winning customers, so they become less valuable, and Private Equity investors buy them out at a 'salvage value'. PE often pursues risky strategies in an attempt to make the brand profitable again, and these strategies often fail. Stories like EB's are not ones of PE buying and destroying otherwise successful companies.
It's very popular on here to attack PE--which I'm not going to especially defend. But it's also the case that PE also tends to come in when a company is already troubled in some manner. One answer I guess, is just go out of business on your own which many companies do.
> One answer I guess, is just go out of business on your own which many companies do
Yes. One of the genuine services (in an economics sense) PE provides is to do the dirty reputation-ruining cash-grab tricks that original founder/owners don't have the stomach for.
> But it's also the case that PE also tends to come in when a company is already troubled in some manner.
The problem is that PE also has a nasty habit of coming into a business that is marginally profitable but not spectacularly so, saddling it with giant amount of debt to vacuum up the cash flow, and killing the business.
There is nothing wrong with a sustainably profitable business. Investors, however, want returns from the lottery ticket that they fund.
Yup. They'll borrow huge sums on the credit and good basis of the company, and then "charge it" all to themselves as "management fees", vacuum it dry, and dump the company.
If you are a large business, you likely have multiple lines of credit already establish, potentially into the hundreds of millions or more range. Those are backed by the organizations credit and assets, and aren't likely to be yanked just because the organization has a new owner.
Private Equity has been buying up vets in the UK and jacking up prices massively, causing all sorts of knock-on negative consequences. Vets in the UK were not failing before.
Unfortunately our competition authorities are toothless. Their proposed remedy is that vets will have to publish prices on their websites from now on. Woohoo.
But my question is, how long has this been going on for? I'm in my late 40s. I remember as a kid thinking Schwinn bicycles were the "cheapo" brand. My father, however... would would be in his 90s now... remembered them as a top tier brand.
I have this theory that the reason a lot of prices on goods we've loved our whole lives don't keep up with inflation is because brand loyalty has SUCH power that it's worth it for people to buy and enshittify those brands -- so that they can sell them to us as we age at the prices we are used to paying for them.
They make newer "luxury" brands to sell to younger people who are still deciding what a "reasonable" price to pay for something is.
The article doesn't really mention: Authentic Brands Group, an asset-light PE org, bought it in 2021; a company called Outdoor 5 LLC now licenses Eddie Bauer's e-commerce and wholesale operations; and we're well deep into enshittification. You can find widespread complaints of bad product quality. Note that ABG wasn't the first PE company to own them, but they seem to have accelerated the enshittification / are doing a bust-out: turning them into a bottom-dollar contract manufacturer scam before people broadly realize the brand name no longer merits the quality reputation it has/had.