WebHouse Club, a licensee of Priceline.com Inc. offering name-your-price service for gasoline and groceries, said this week it will go out of business in 90 days.
The Greenwich, Conn.-based company said it didn't anticipate being able to raise the necessary capital to keep its business going and achieve profitability. Its $70 million in cash reserves and working capital will be "more than sufficient to satisfy all obligations to customers, employees and suppliers," WebHouse Club said in a statement.
Customer service at WebHouse Club will remain fully operational until the company shuts down, the statement said. All customers with unredeemed gas and grocery purchases will receive a full refund of any prepaid amount and extra money to cover the estimated savings for gas and groceries.
WebHouse Club served 2 million grocery and gasoline customers, 7,200 grocery stores, 6,000 gas stations and about 125 consumer packaged goods manufacturers.
Rob Leathern, an analyst at Jupiter Communications Inc. in New York, said Wall Street hasn't been very tolerant of allowing start-up online businesses to build from their core.
"It didn't offer a value proposition to consumers and manufacturers," said Rob Rubin, an analyst at Forrester Research Inc. in Cambridge, Mass. Consumers would save money initially but save less the more they used WebHouse Club, he said. Manufacturers didn't buy into the service because consumers were purchasing products based on price, not brand, Rubin said.
WebHouse Club didn't return calls by press time.
The bad news continued for Priceline. Another affiliate, Perfect YardSale Inc., has ceased operations. Perfect YardSale offered used merchandise to consumers at Priceline's Web site.