Boo.com

Boo.com

infobox company
company_
company_type = Dutch NV
(Disestablished in 2000)
foundation = 1998
location = London
key_people = Ernst Malmsten
Kajsa Leander
Patrik Hedelin
industry = Retail
products = Clothing, cosmetics

Boo.com was a United Kingdom Internet company founded by Ernst Malmsten, Kajsa Leander and Patrik Hedelin that famously went bust following the dot-com boom of the late 1990s.

After several highly publicised delays, Boo.com launched in the Autumn of 1999 selling branded fashion apparel over the Internet; however, after spending $135 million of venture capital in just 18 months [Details of funds raised are contained in the book boo hoo by Ernst Malmsten.] , it eventually had to liquidate and was placed into receivership on 18 May 2000.

In June 2008, CNET hailed Boo.com as one of the greatest defunct websites in history. [cite web|url=http://crave.cnet.co.uk/0,39029477,49296926-3,00.htm|title=The greatest defunct Web sites and dotcom disasters|publisher=CNET|date=2008-06-05|accessdate=2008-06-05]

Ernst Malmsten wrote about the experience in a book called "boo hoo" published in 2001.

Reasons for failure

Timing

Although there were several months of delays prior to launch and problems with the user experience when boo.com first launched as described below, these had been largely cured by the time the company entered receivership. Indeed sales had grown rapidly and were around $500,000 for the fortnight prior to the site being shut down.

The fundamental problem was that the company was following an extremely aggressive growth plan, launching simultaneously in multiple European countries. This plan was founded on the assumption of the ready availability of venture capital money to see the company through the first few years of trading until sales caught up with operating expenses. Such capital ceased to be available for all practical purposes in the second quarter of 2000 following dramatic falls in the NASDAQ presaging the "dot crash" following the Dot-com bubble. Boo would probably have failed for this reason even if the user experience had been excellent and the launch on schedule. Boo were only the first of numerous similar Dot-com company failures over the subsequent two years.

Problems with the user experience

The boo.com website was widely criticized as poorly designed for its target audience, going against many usability conventions. The site relied heavily on JavaScript and Flash technology to display pseudo-3D views of wares as well as Miss Boo, a sales-assistant-style avatar. The first publicly released version of the site was fairly hefty—the home page alone was several hundred kilobytes which meant that the vast majority of users had to wait minutes for the site to load (as broadband technologies were still not widely available at that time). The site's front page did contain the warning, "this site is designed for 56K modems and above". The complicated design required the site to be displayed in a fixed size window, which limited the space available to display product information to the customer. Navigation techniques changed as the customer moved around the site, which appealed to those who were visiting to see the website but frustrated those who simply wanted to buy clothes.

Its interface was also complex with a hierarchical system that required the user to answer four or five different questions before revealing that there were no products in stock in a particular sub-section. The same basic questions then had to be answered again until results were found.

Burn rate

Boo.com's Swedish founders famously spent their way through £125 million ($188 million) in just six months. [ [http://query.nytimes.com/gst/fullpage.html?res=9F05E4DB103CF931A35755C0A9669C8B63 INTERNATIONAL BUSINESS; Fashionmall.com Swoops In for the Boo.com Fire Sale - New York Times ] ] Boo.com's sales did not match expectations, due partly to the very high number of products returned by customers (a service that was offered for free, but charged for by their logistics supplier Deutsche Post). Poor management and a lack of communication between departments resulted in costs spiraling unchecked—the effectiveness of an eye-catching (and expensive) ad campaign was limited because the website wasn't ready in time, resulting in curious visitors being greeted with a holding page. Staff and contractors were recruited in large numbers, with a lack of direction and executive decision about how many and what was required. This resulted in a crippling pay-roll cost. One contractor alone was reputed to be earning over £100 an hour, and Boo.com had asked them to put off holidays by offering 5-Star hotels and first class flights.

Aftermath

The biggest loser among boo.com's investors was Omnia, a fund backed by members of Lebanon's wealthy Hariri family, which put nearly £20 million into the company.

Creditors, most of whom were advertising agencies, were owed around £12 million. Over 400 staff and contractors were made redundant in London and around the world, and many had not been paid for several months.

In a widely circulated article, [ [http://tnl.net/blog/2000/05/19/boocom-goes-bust/ Boo.com Goes Bust ] ] Tristan Louis blamed the management of the company for its failure.

Fashionmall.com, which has been operating since 1994, bought the remains of Boo.com which included brand, Web address and advertising materials but this deal did not include any physical assets, software or distribution channels. [ [http://query.nytimes.com/gst/fullpage.html?res=9F05E4DB103CF931A35755C0A9669C8B63 INTERNATIONAL BUSINESS; Fashionmall.com Swoops In for the Boo.com Fire Sale - New York Times ] ] . The deal also included the Miss Boo character. Boo's main assets, its software and technology, went to Bright Station for $250,000, Boo.com had purchased this technology for $70 million. [ [http://query.nytimes.com/gst/fullpage.html?res=9F05E4DB103CF931A35755C0A9669C8B63 INTERNATIONAL BUSINESS; Fashionmall.com Swoops In for the Boo.com Fire Sale - New York Times] . Bright Station is a British company run by Internet entrepreneur Dan Wagner.

In all, less than $2 million was earned by selling all Boo's remaining assets. [ [http://www.jobfairy.com/articles01/BooAndthe100OtherDumbestM.html jobfairy.com - Boo! And the 100 Other Dumbest Moments in e-Business History]

As late as 2003, stickers from their guerrilla marketing campaigns could still be seen on London street furniture, with the slogan "Fashion never dies!".

In 2005 CNET called Boo.com the sixth greatest dot-com flop. [ [http://www.cnet.com/4520-11136_1-6278387-1.html Top 10 dot-com flops - CNET.com]

Current state of the domain

In May 2007 Web Reservations International turned boo.com into a travel site with reviews and listings. When the new site launched, it already had more than one million user reviews which had been collected from existing WRI travel sites. [cite web |url=http://www.utalkmarketing.com/Article.aspx?id=1895 |title=boo.com in new travel guise |work=utalkmarketing.com |date=2007-05-02 |accessdate=2007-05-18]

References

External links

* [http://www.amazon.co.uk/Boo-Hoo-Dot-Com-Story/dp/0099418371 Amazon.co.uk listing of "Boo Hoo: A Dot Com Story" (ISBN 0 09 941837 1) - a book written/edited by Ernst Malmsten, Erik Portanger and Charles Drazin.]
* [http://www.ernstmalmsten.com An angry creditor of Boo.com's founder Malmsten]
* [http://www.useit.com/alertbox/20000528_boo.html Jakob Nielsen's mini-review of Boo.com] - A design/usability perspective
* [http://tnl.net/blog/2000/05/19/boocom-goes-bust/ Boo.com Goes Bust] - An insider's perspective
* [http://web.archive.org/web/20010927092825/http://boo.com/ archived version of boo.com]
* [http://www.davechaffey.com/E-commerce-Internet-marketing-case-studies/Boo.com-case-study Case study on Boo.com for marketing and business students]
* [http://www.boksson.se/ver3/boo-com-och-it-bubblan-som-sprack,9789175884172.html Boo.com och IT bubblan som sprack]


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