The housing mortgage crisis, dot com boom and bust, payday loan industry, for-profit universities, fad diet companies, supplements with no scientific basis, cigarette manufacturers... There are whole industries and periods of time where large numbers of shady companies are rising and falling.
This was an issue of bad timing, not a bad business model. People weren't really mentally at the point of buying such thing on-line, and pets.com burnt through their cash so quickly that it couldn't wait for people to start adopting it. As pointed out by others, Amazon made it work; however, they are very smart about diversifying, re-investing, and not being profligate with cash-on-hand.
