The news follows reports that Urbanfetch was in negotiations with Kozmo.com, its only competition, to merge. Kozmo reportedly abandoned plans to acquire the company they once sued for stealing its business plans because of weak finances. While Kozmo claims to have adequate financial backing from various investors, Urbanfetch was suffering from a lack of capital. Now it is slashing prices on existing merchandise and requiring a $60 minimum order for delivery. It will move out of their corporate offices at 538 Broadway and its warehouse at 560 W. 34th St. About 160 employees will be laid off, 60 of them in the London satellite operation.

Urbanfetch Express, the recently developed courier service will remain, but will not operate through the Web site, which will be shut down when the last of the inventory is sold. The courier service is now contracted to work with Ernst & Young, Pricewaterhouse Coopers and Condé Nast, among others.

Kozmo.com is now the only online delivery service in New York City. Joseph Park founded Kozmo in 1998, prior to Urbanfetch's launch in 1999, making home base here. Distribution centers in New York, Boston, Washington, DC, Atlanta, Houston, San Diego, Los Angeles, Portland and Seattle allow users there to have goods brought to them by bike, car or van within an hour. Real time inventories by zip code allow for buying items available in that warehouse then. Delivery staffers pick up items stored on shelves or in a giant refrigerator and use a digital map to find their destination. Kozmo announces on its site that it will begin offering users anywhere the ability to "Kozmo someone a gift" to one of the cities listed above.