By  on April 18, 2007

After almost 10 years in business, Internet pioneer Girlshop is shutting down, a victim of the popular formula it helped create.

Founder Laura Eisman said her two-year-old brick-and-mortar store in the Meatpacking District could have stayed open, but challenges to the online business dragged it under.

"The past year has been extremely difficult," she said.

When Eisman launched the site from her New York City apartment in 1998, it was the first to offer contemporary fashion from small, emerging designers such as Jussara Lee and Selima. But the biggest innovation was its look, which resembled a chic magazine rather than a database because Eisman was a graphic designer. It was one of the first online retailers to turn a profit, and although Girlshop never attracted venture capital backing, it grew steadily through the dot-com boom and the bust.

By 2004, revenues had reached almost $5 million, but the online store hit a plateau as chain retailers, department stores and dozens of boutiques in the U.S. and overseas started selling a similar mix of clothes and accessories from contemporary and emerging designers.

"When we launched, the reason we were successful was, we offered unique products and we started this trend for emerging fashion," said Eisman. "Now that it's everywhere, it's made us less unique.

"Conceptually, I know from casing the business that we were the ones who set the bar and established this, and it kind of turned around on us and we were trying to keep our customers."

Bigger players such as Shopbop, owned by, offer free overnight shipping and discounts Girlshop cannot match.

Increasingly, the business will be about price, said Eisman, who predicted a shakeout. If that is the case, then Girlshop will have been a bellwether for the second online boom.

Six weeks ago, the company vacated its corporate offices on 14th Street and cut most of its staff, who received final paychecks. The inventory was transferred to the Meatpacking District store, which is still open. The company has the lease until the end of the month. A liquidation sale starts Thursday and runs through Sunday. The Web site is still up, but stopped accepting orders two weeks ago.The company is in debt and has no cash, but has not filed for reorganization. Girlshop owes "a lot of vendors small amounts of money," Eisman said, declining to specify the size of the debt.

"We will liquidate what we can and, hopefully — I don't think the creditors will be paid in full but, hopefully, something."

Eisman and her husband and business partner, Todd Richter, also have credit card debt and bank loans they secured personally. For the last eight months, they have searched for a buyer or investor, but their last hope for a partnership fell through last week.

News of the shutdown reached the blogosphere Tuesday and Eisman said customers had been calling to express their sorrow about the closing.

"It makes me feel good. People have stories — 'I was in college; I searched the Web site every hour.'"

Eisman and Richter have been staffing the store, leading Eisman to joke, "We kind of went full circle."

When it is all over, Eisman said she would take a break.

"This has been so emotionally and financially draining for us." After that, she has no immediate plans.

"I'm excited to do something new and I feel like Girlshop definitely made its mark in history and was an innovator and, hopefully, will be remembered fondly for what we've done for emerging designers. It was a good run and an important thing to do and I have no regrets."

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