SkyMall, the quirky airline catalog, looks as though it may be grounded before long. Parent company Xhibit has filed for Chapter 11 bankruptcy protection and seeks to sell its assets.
In an SEC filing, Xhibit explains that it has fallen victim to an "intensely competitive" direct marketing retail industry that now includes the likes of eBay and Amazon.com. The low entry cost of getting into online sales has doomed the business model that's sustained SkyMall for 25 years, according to the company (SkyMall revenue from home/garden, electronics, pet doodads and more has slid from about $33 million in 2013 to less than $16 million through the first nine months of 2014).
“We are extremely disappointed in this result and are hopeful that SkyMall and the iconic ‘SkyMall’ brand find a home to continue to operate as SkyMall has for the last 25 years,” said Scott Wiley, CFO and Acting CEO of Xhibit.
Smartphones and tablets are largely to blame for SkyMall's downfall, according to the SEC filing. "Historically, the SkyMall catalog was the sole in-flight option for potential purchasers of products to review while traveling. With the increased use of electronic devices on planes, fewer people browsed the SkyMall in-flight catalog. The substantial increase in the number of air carriers which provide internet access, and the U.S. Federal Aviation Administration’s recent decision to allow the use of electronic devices during take-off and landing, resulted in additional competition from e-commerce retailers and additional competition for the attention of passengers, all of which further negatively impacted SkyMall’s catalog sales."
What's more, Delta stopped carrying SkyMall in airplanes late last year and Southwest no longer plans to do so as of April 1.
Xhibit also acknowledges that many of the items in its catalog could be classified as discretionary spending -- the sort of spending that's hurt when the economy is rough and people are out of work.
So no, that iFetch ball launcher for dogs just isn't a must-have purchase these days, apparently.
Phoenix-based Xhibit will look to auction off its assets this spring to pay off its debts.
This story, "Smartphones, Tablets & eBay Send SkyMall to Chapter 11" was originally published by Network World.