Failures and breakthroughs – exposed, reflected, considered

How boo.com got booed

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Boo.com was a European company founded in 1998 and operating out of a London head office founded by three Swedish entrepreneurs: Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Malmsten and Leander had previous business experience in publishing where they created an online bookstore, bokus.com, which in 1997 became the world’s third largest book e-retailer (according to Investor’s Week, 26th May 2000) behind Amazon and Barnes & Noble. They became millionaires when they sold the company in 1998.

Then came boo.com.

The owners of boo.com wanted to develop an easy to use experience which re-created the offline shopping experience as far as possible. Boo.com wanted to become the world’s first online global sports retail site. The name of the company (according to Malmsten) originated from filmstar ‘Bo Derek’, best known for her role in the movie ‘10’. The domain name ‘bo.com’ was unavailable, but adding an ‘o’, they managed to procure the domain boo.com for $2,500 from a domain name dealer.

Boo.com was to target mostly ‘young, well-off and fashion-conscious’ 18 to 24 year olds. Boo marketed itself as a premium sports, urban street wear and fashion retailer, stocking quality products for the fashion conscious young individual. However, with premium products came expensive charges. The market for youth clothing was viewed as large: according to New Media Age (1999) and projections from retail analysts such as Verdict. An initial round of funding included investments from the JP Morgan, LMVH Investment and Benetton amounting to a total of around $125 million.

To make things as close to reality as possible, the virtual salesperson, Miss Boo, would great online visitors and guide them through the site, giving helpful tips and advice. When selecting products, visitors could drag them on to models, zoom in, and rotate them in 3D. The technology to achieve this was built from scratch. With all visual gimmicks and stylish add-ons, boo.com promised 8 second waiting time for the website to load.

Immediately before the launch, management team met with Larry Lenihan from Pequot Capital. The boo.com team provided revenue forecasts but were unable to answer questions about potential of the business such as “What kind of conversion rate are you aiming for? What’s your customer acquisition cost? And what’s your payback time on customer acquisition cost?” When these figures were obtained, the analyst found them to be ‘far fetched’ and reputedly ended the meeting with the words, “I’m not interested. Sorry for my bluntness, but I think you’re going to be out of business by Christmas.”

Boo.com officially launched on 3rd November, 1999, after a six-months delay. The homepage was featuring Miss Boo, as planned, but the user experience of the website turned out to be disasterous: slow site browsing, poor navigation and irritating technology.

ZDNet created a report of their experience of using the Boo.com. They describe an example search for product information, which took five user actions, including escaping past annoying animated graphics, to reach the desired location. “With products zooming all around the page, customers practically have to play target practice in order select the product they want” (ZDNet, 29th November 1999). The FT reported that one customer had been advised by Boo to “limit the amount of transactions they made, to three per twenty minutes” (Financial Times, 4th November 1999). There were also other problems. Studies sponsored by KPMG, Hewlett-Packard and VNU Publications (Computing, 30th November 2000) show the three main reasons for web purchases in the European market (UK, France, Germany) as “Ease/Convenience”, “Better Prices” and ‘Speed of Process’. Boo.com seemingly failed on all three dimensions.

A quick glimpse inside boo.com reveals some of most fundamental underlying problems, which were to affect and become critical in the post-launch period (as they did). These included unrealistic revenue projections, ambitions to immediately start globally, excessive employment benefits in pre-launch period and luxurious spending.

Few months after the launch, sales results were disappointing in some regions with US sales accounting for 20% compared to the planned 40%. The management team felt that further investment was required to grow the business from a presence in 18 countries and 22 brands in November to 31 countries and 40 brands the following spring.

The end of boo.com came on May 18th 2000, when investor funds could not be raised to meet the increasing marketing, technology and wage bills (and projected expenses for business expansion). In May 2007, Boo.com re-launched as an online travel community and review site under new ownership by Web Reservations International (WRI), unrelated to the original Boo.

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Written by Hayk

October 5, 2008 at 10:11 am

One Response

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  1. […] (among which boo.com, the biggest European dotcom failure, about which there is a longer account here). Let us not forget that the huge losses of the dotcom bust must not make us loose sight of the […]


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