What Happened

The collapse of the dotcom bubble, followed by 9/11 and a series of financial scandals at major U.S. corporations led to the 2001 recession.

How they responded

EBAY: The ecommerce platform launched in 1995 and went public in 1998, just a few years before the 2001 crisis began. eBay sold $7.2 million worth of goods in its first year, with revenues growing over 700% from 1997 to 1998. But instead of slowing down, eBay grew its platform and maintained its momentum during the recession. 

 

  • CAPITALIZING ON THE MOMENT: eBay was the first online platform that featured a wide range of products to be sold at auction and the 2001 recession allowed panicked consumers to liquidate their closets and storage units for much-needed cash. During a time of economic uncertainty, consumers enjoyed the excitement of virtually negotiating with other users, finding deals and buying secondhand products.

 

PRICELINE: The travel booking website launched in 1997, helping users find discounted rates on hotels, car rentals and airfare throughout the U.S. But the aftermath of 9/11 led to a drastic drop in travel, and therefore airline revenues. This forced Priceline to reevaluate its service and adjust its target audience.

 

  • BE FLEXIBLE: Priceline shifted its focus away from airfares (the airline industry experienced a 30 percent decrease in demand) and toward hotels and vacation packages, starting in North America and then in Europe in 2000—but strengthened its offering in Europe to stay afloat during this recession.  Without any pricing uniformity among its hotel competitors, Priceline created a niche for itself by catering to budget-conscious travelers. As a result of its efforts, the company turned its first annual profit—reporting $1.1 billion in travel bookings and a revenue of $863.7 million. Priceline’s flexibility helped it to cater to its core audience accordingly and reach a new target audience less impacted by the recession.