In a capitalist society consumerism is king, but people can be fickle with their loyalty to a brand. The public may choose to boycott a product or service at any given moment, so one false move can bring an entire business empire tumbling down. Even the most successful multi-billion dollar businesses are capable of making mistakes, but some are far worse than others. Here are 10 of the craziest business debacles of the 21st century…at least, so far.
10. Blockbuster Passed Up The Opportunity to Buy Netflix in 2000
We all know that Blockbuster Video eventually completely tanked in the US, and there is only one store left in existence. But they could still be around today, if only they had purchased Netflix. In the year 2000, Reed Hastings, the founder of Netflix, met with the CEO of Blockbuster, John Antioco, and pitched the idea that they could be partners in bringing digital video rentals to customers. Antioco turned Hastings down because he believed that customers would be loyal to their brand.
Eventually, Blockbuster could see that Netflix was growing into a multi-billion dollar company, and by the time they tried to catch on to the digital revolution, it was far too late. People were no longer getting their movies from Blockbuster when they could pay one flat monthly fee for an unlimited amount. While there may be a lot of nostalgia for those of us who grew up renting movies at Blockbuster, it simply wasn’t enough to keep them in business.
9. The Enron Scandal Revealed Corporate Greed in 2001
Enron was a natural gas company that had been founded in the 1980s. Over the years, it became one of the most valuable companies in the United States, with an estimated value of $63.4 billion. It turns out that the company was doctoring their books to make it seem as if they were making massive profits every quarter. Because of this, investors felt confident that the company was doing well, and money was pouring in.
In the year 2000, Enron’s stock price was as high as $90.75 per share, and by the time the truth was revealed in 2001, the value of their stock dropped to less than a dollar. Thousands of employees and investors lost their jobs, and their retirement funds. Enron’s executives were put on trial for fraud and insider trading, and the incident sparked several government reforms to try to prevent this from happening again. However, it wasn’t enough to stop the corporate greed that led to the 2008 recession.
8. In 2003, Hooters Started an Airline
The Hooters restaurant chain is known for beautiful women wearing skimpy uniforms while they serve beer and wings. In 2003, the CEO thought it would be a good idea to open a Hooters Airline, where beautiful waitresses and stewardesses served the same kinds of food during a flight. The airline was located in Myrtle Beach, South Carolina, and it actually brought a lot of new tourism to the city.
However, the CEO was very inexperienced with running an airline. They sold tickets at the flat price of just $129 each way to 15 locations in the United States. This was far too cheap to cover the expenses. Not only did it fail to bring in profits, but customers were disappointed to learn that their experience did not live up to the fantasy they had in mind. After just three years, it was clear that Hooters Airlines was hemorrhaging money. The project ultimately lost the corporation $40 million.
7. Urban Outfitters Has Been Controversial on Purpose Since 2003
Urban Outfitters is a Philadelphia-based clothing brand that also sells home decor and quirky gifts, but for years, their edgy products have often crossed the line of having incredibly poor taste. In 2003, they released a board game called “Ghettopolly”, which featured illustrations of African Americans, where the cards say that they are pimping or robbing stores. The NAACP immediately called them out for the racism, and it was pulled from the shelves.
You would think that the incident would have made them more careful, but that’s where you’re wrong. Over the years, Urban Outfitters has been in the news for dozens of controversies, including a sweatshirt of Kent State University that appeared to be bloody, which was a reference to a shooting at the hands of the Ohio National Guard in 1970. They have also featured clothing with references to the Holocaust by making a t-shirt with the Star of David on the chest. In 2015, they gave away free kittens with every purchase. Despite all of these ridiculous business decisions, some believe that they are causing controversy on purpose to keep themselves relevant in the media.
6. In 2010, The BP Oil Spill Wreaked Havoc On Our Oceans
On April 20, 2010, eleven employees of the BP Oil company were killed while drilling for oil off the US Gulf Coast. According to Reuters, the oil rig did not have an engineer working on-site, and the employees had failed to contact an expert on shore who would have been knowledgeable enough to help them issues they were having with the equipment. The pressure of the underwater pipes was too high, and this caused an explosion. Millions of barrels of oil poured into the Gulf of Mexico, and it was so extensive it could be seen from space.
Millions of sea creatures died, and dead wildlife was washing up on the shores following the incident. Years later, we are still seeing the effects of the incident on the oceans and in our environment. There are now an unprecedented amount of “dead zones” in the oceans where life can no longer exist. In 2015, after years of court proceedings, BP agreed to pay $18.7 billion in fines, and they have been sued in so many lawsuits it’s totaled a payout of $42.2 billion.
5. JCPenney Profits Plummeted by Getting Rid of Sales in 2011
In 2011, the department store JCPenney was concerned over the fact that there was a decrease in their annual revenue. Someone came up with the brilliant idea of eliminating their coupons and sales completely, advertising that their products were now going to have low prices every single day. They dropped the price of everything in the store by an average of 40%. You would think that customers would love this, but this strategy actually tanked.
It turns out that people truly do feel more motivated to shop when they have a sense of urgency, and when they believe that they need to rush to the store in order to get some kind of discount. Their sales were 27.9% lower than the previous year. They quickly realized that they needed to switch back to using sales and coupons, but not before losing $163 million. The CEO of JCPenney, Ron Johnson, now realizes that “Coupons were a drug” and that they “really drove traffic.”
4. In 2014, Millions of Target Customers Were Hacked
If you live in the United States, you probably still remember the cybersecurity hack on Target’s credit card system in 2014. The credit and debit card information of 40 million customers was stolen. It all started when a company called Fazio Mechanical Services was fixing the air conditioning in the Target corporate offices. The credentials of this contractor were stolen, and the hacker was able to gain access to the computer mainframe and steal the customer data.
Target responded by releasing chip-in-pin credit cards to all of their customers. Most European countries had already converted over to the chip system years before the US, but Target hack was the incentive for companies across the nation to finally make the switch. The incident caused a ripple effect where all of the major banks and credit card companies began releasing cards with chips, and major retailers were forced to update their payment systems to keep customer data secure.
3. In 2016, Samsung Phones Were Exploding
In 2016, Samsung Galaxy Note 7 phones started exploding all over the world. While it sounds hard to believe, it was finally caught on security camera footage while a South Korean man was at work. There was no denying these incidents were truly happening. When they could no longer deny it, Samsung tried to save their reputation by blaming the victims, saying that these people must have been using batteries that were not official Samsung products. Later, more and more phones were exploding, and there was no getting around the fact that it was a manufacturing error. It turns out that the company installed batteries that were the wrong size, which caused them to catch on fire. Samsung had to recall 2.5 million Galaxy Note phones, and the company lost $5 billion.
Their sales went down 15% that year. While this incident had the potential to completely ruin Samsung as a company, they were actually saved by memes. That’s right, the Internet swooped in and made exploding cell phones such a hot topic that people actually thought it was kind of funny, and they were willing to forgive and forget. By the time Samsung released their Galaxy Note 8, their sales were back up to where they had been before the major fiasco.
2. In 2017, a United Airlines Passenger Was Forcibly Removed From His Flight
On April 9, 2017, a doctor named David Dao was on United Airlines flight 3411, which was leaving Chicago to his home in Louisville, Kentucky. Unbeknownst to most people at the time, United had a policy where they would overbook flights on purpose, and then kick people off when they ran out of seats. Dr. Dao was already seated, and security asked him to leave the plane. He refused to go, and he tried to explain that he was a doctor and had patients to see the next morning. After refusing to leave, security dragged him down the aisle, and he slammed into the arm rest, which left him bleeding and unconscious. The security officer never stopped to give him medical attention, and horrified passengers pulled out their cellphones to capture it all on video.
The CEO of United, Oscar Munoz, tried to blame the incident on Dr. Dao, saying that he was “belligerent” and “disruptive” - basically insinuating that he deserved what was coming to him. This caused such an uproar that even Donald Trump agreed that it was horrible. Munoz was informed that if they did not change their policies immediately, the company would have to appear before Congress. Following this incident, United stock prices dropped and they were sued by several people who were victims of mistreatment.
1. In 2018, Facebook Faced Trials For Selling Customer Data
Facebook’s founder and CEO, Mark Zuckerberg, is no stranger to controversy. Over the years, he’s been involved in multiple lawsuits and scandals. A company called Cambridge Analytica was harvesting the data of Facebook users and using personal information to manipulate advertisements. An FBI investigation has revealed that Russians may have used Cambridge Analytica to manipulate the 2016 presidential election, with Facebook somehow involved.
Zuckerberg denied the accusations, but in April 2018 he was forced to appear before both Senate and Congress to answer for the company selling customers’ private data. Zuckerberg was made to pay fines and urged to step down, but he refused to leave his seat as CEO. The value of Facebook’s stock has dropped 20%, or $120 billion. Only time will tell if the social media platform will ever make a comeback.
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