It's not that the model is necessarily wrong, it's the way it was implemented that didn't work. It's not that e-commerce doesn't work, but that it might be extremely difficult to get it to work for certain categories. The medium just isn't enough to convey the quality of experience that can be conveyed through print or in person. The idea of experience also comes into play when you consider the category as a whole.
People are still very nervous about putting their credit card numbers into an ecommerce site.
Because many people perceive that the barriers to entry for putting up a website is very low. On the other hand, when you get a printed catalog in the mail there's a feeling of solidity, of legitimacy, or trust. Finally, a lot of etailers shot themselves in the virtual foot by not paying enough attention to the customer once they'd gotten to the site. However, when that customer got to the site and wanted to find stuff or buy products, they were often stymied by poorly designed interfaces and technical glitches. If they're not adding enough value to make the online transaction worth their while, the customer isn't ever going to buy again.