Date: Thu May 18 2000 - 11:33:13 PDT
Further to the thread on why companies fail, this is a review of what
happened to boo.com, from THE REGISTER.
Why did Boo flame out so fast?
by Dr Therese Torris, Forrester Research
Boo.com quickly burned cash on PR and advertising
Boo.com's first financing round of E120 million - raised from
prestigious investors like Europ@web, Morgan Capital, and Goldman
Sachs - was the largest ever private investment in a Web retailer
headquartered in Europe. But within six months, boo.com exhausted
these funds on communication - for example, forking out £25 million in
offline advertising through TV, radio, and fashion magazines like
Sales growth failed to meet expectations
Although audience and sales tripled during the site's first quarter,
boo.com failed to meet sales targets. In January, the firm fired 20
per cent of its employees and began losing key executives. February
results - half-a-million unique visitors and sales below £1 million
per month, despite targeting 18 countries in seven languages -
disappointed investors like Benetton's 21 Investimenti, which declined
to participate in further financing rounds.
Between interviews, boo.com's media-friendly leaders Ernst Malmsten
and Kasja Leander steered the firm through several rapid about-faces.
Originally positioned as a lifestyle site competing on premium brand
selection and not on price, the site switched to offering 40 per cent
discounts by January. And although the site revelled in rich content
and rich media at launch, by April it had ditched its fashion
newsletter, gagged virtual assistant Ms. Boo, and launched paper
catalogues as a low-tech alternative to its three-dimensional product
Poor execution of a good idea
Why did boo.com flame out so fast? The firm mistimed and failed to
execute on a good idea: to enhance clothing presentation through
Boo.com started by keeping most of its target audience out
Boo.com advertised how the site's advanced 3D technology allows users
to spin a product around for a full view. But 99 per cent of European
and 98 per cent of US homes lack the high-bandwidth access needed to
easily access such animations.
Its reputation as a cumbersome and slow site still sticks even though
it's now simpler and faster.
Innovation dried out
Boo.com's technology not only posed problems, but it also ceased to
provide differentiation. Three-dimensional product presentation,
zooming, colour changes, and virtual try-on can be found on sites like
landsend.com; other sites can acquire these features from vendors like
NxView or Xippix.
Boo.com belatedly addressed basic customer needs
Boo.com's hip design confused users with a flurry of orange windows
and irrelevant comments from Ms. Boo. By the time the site added
necessary attributes like privacy protection and persistent product
navigation bars, many viewers had already fled.
Lesson for European dotcoms - get real
With funds drying out, boo.com's best bet is to restructure and sell
its remaining assets - a brand and a now-functional multilingual site
- to a competitor like Fogdog that is rich in virtual cash and seeking
a European presence. Lessons for all Dot Coms:
Stop experimenting in the limelight
By communicating too soon, boo.com earned a bad name for itself
instead of building brand value. Sites must conduct more professional
site testings and act on their conclusions before raising their
Bring in passionate experts
Retail sites not only miss the "touch and feel" factor, they also
often fail to generate trust and a feeling of being acknowledged as a
client. Sites should pass on virtual advisors in favour of
flesh-and-blood experts like ChateauOnline's wine taster Deluc.
Focus on target customer benefits
Instead of overhyping the convenience they offer, Dot Coms must remind
themselves what customers miss about in-person shopping and compensate
with true value: meaningful personalization but also discounted
This archive was generated by hypermail 2b29 : Thu May 18 2000 - 11:36:58 PDT