Re: Boo.com

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From: Ian Andrew Bell (despot@ianbell.com)
Date: Thu May 18 2000 - 12:13:13 PDT


Actual URL: http://www.theregister.co.uk/000518-000008.html

And the Text (standard practise on FoRK!):

Posted 18/05/2000 9:56am by Dr Therese Torris, Forrester Research
Forrester Why did Boo flame out so fast?
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 Elle.

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.

Strategy flip-flopped
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 presentation online.

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 online innovation.

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 visibility.

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 prices.

At 06:33 PM 18/05/00 +0000, joelinda1@home.com wrote:
>Further to the thread on why companies fail, this is a review of what
>happened to boo.com, from THE REGISTER.
>
>http://www.theregister.co.uk/index.html
>____________________
>
>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
>Elle.
>
>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.
>
>Strategy flip-flopped
>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
>presentation online.
>
>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
>online innovation.
>
>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
>visibility.
>
>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
>prices.


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