Boo.com

Boo.com

Type	Dutch NV (Disestablished in 2000)
Industry	retail
Founded	1998
Headquarters	London
Key people	Ernst Malmsten Kajsa Leander Patrik Hedelin
Products	clothing, cosmetics
Website	Boo.com

Boo.com was a British Internet company, founded by Swedes Ernst Malmsten, Kajsa Leander and Patrik Hedelin, which went out of business following the dot-com boom of the late 1990s.

After several highly publicized delays, Boo.com launched in the autumn of 1999 selling branded fashion apparel over the Internet. The company spent $135 million of venture capital in just 18 months,^[1] and it was placed into receivership on 18 May 2000 and liquidated.

In June 2008, CNET hailed Boo.com as one of the greatest dot-com busts in history.^[2]

Ernst Malmsten wrote about the experience in a book called Boo Hoo: A dot.com Story from Concept to Catastrophe, published in 2001.^[1]

Headquarters and relaunch

The company had its headquarters along Carnaby Street in London in a building which it initially shared with the Erotic Review Magazine.^[3] The company initially had 40 employees.^[4] In October 1999, it had a total of eight offices and 400 employees^[3] in Amsterdam, Munich, New York City, Paris, and Stockholm.^[4] It relaunched in fall 2000 with Kate Buggeln, an ex-Bloomingdale's salesperson and Internet consultant, appointed as president. She told Women's Wear Daily that they were working to "expand beyond the portal business model into Boo product and Boo licensing."^[5]

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, 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 was 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.^[6] 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 included many large pages; the home page, for example, was several hundred kilobytes which meant that many users had to wait minutes for the site to load, as broadband technologies were not widely available at the time. The site's front page contained 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. This was done to appeal to those who were visiting to see the website, but frustrated those who simply wanted to buy clothes.

The site's interface was complex and included a hierarchical system that required the user to answer four or five different questions before sometimes 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.

Market analysis

During the second half of 1999, the company conducted market research in several countries. The project was coordinated from London. The research company MOA (Market Opinion Analysis) conducted the survey in Sweden. The analysis was based on a rather complex model of how clothes were chosen by the consumer and then bought or sold. MOA's analysts claimed that the site worked neither as a marketing tool nor as a channel for sales and distribution, and that the target audience was not ready to buy large quantities on the web, at least not in the short and medium term. The research company also shed light on other problems with the site, including logistics and payment systems.

Burn rate

Boo.com spent £125 million ($188 million) in just six months.^[7] Boo.com's sales did not match expectations, due partly to a higher-than-expected rate of product returns (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 rapid growth in costs. The effectiveness of an 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 people were required, resulting in high payroll costs.

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,^[8] Tristan Louis blamed the management of the company for its failure.

Fashionmall.com, which had 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.^[7] The deal also included the Miss Boo character. Boo's main assets, its software and technology, were sold to Bright Station for $250,000. Boo.com had purchased this technology for $70 million.^[9] Bright Station is a British company run by Internet entrepreneur Dan Wagner.

Less than $2 million was earned by selling all Boo's remaining assets.^[10]

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

In 2005 CNET called Boo.com the sixth greatest dot-com flop.^[11]

Current state of the domain

In May 2007 Web Reservations International (WRI) 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.^[12]

In October 2010, the new boo.com site announced that it was closing down with effect from 1 November 2010.

As of July 2013 boo.com redirects to hostelworld.com.

References

External links

• Boo.com (Archive)
• Jakob Nielsen's mini-review of Boo.com - A design/usability perspective
• Boo.com Goes Bust - An insider's perspective
• archived version of boo.com
• Case study on Boo.com for marketing and business students