Flooz.com

Flooz.com Concept     

    

           For every good dot-com idea, there are a handful of really terrible ideas. Flooz.com was a perfect example of a “what the heck were they thinking?” business. Pushed by Jumping Jack Flash star and perennial Hollywood Squares center square.

 Whoopi Goldberg

             Flooz was meant to be online currency that would serve as an alternative to credit cards. After buying a certain amount of Flooz, you could then use it at a number of retail partners. While the concept is similar to a merchant’s gift card, at least gift cards are tangible items that are backed by the merchant and not a third party. 

             It boggles the mind why anyone would rather use an “online currency” than an actual credit card, but that didn’t stop Flooz from raising a staggering $35 million from investors and signing up retail giants such as Tower Records, Barnes & Noble, and Restoration Hardware.

How Flooz Works:

Flooz.com Some Advertisement 

           In a statement posted to its Web site, Flooz admitted that attempts to save itself by finding a buyer had failed. "Flooz.com has been adversely affected by dramatic changes in capital markets and the general slowdown in the economy. Flooz.com had been in merger discussions with a number of companies but was unable to find a suitable partner," it said.

Flooz.com's collapse comes hot on the heels of the closure of fellow online currency company Beenz.com. Both firms, during the heady days of the Internet boom, had hoped to dominate the new economy landscape, but it seems that credit card payment will prevail on the Internet, in the short term at least. However, Levitan said yesterday that he thought that Flooz had been a great idea, and predicted that another company would make a success of Internet gift vouchers in the future.

Flooz. com Case

Failures

•  From praise to criticism
•  Security problems,
•  There’s tons of buzz around the idea
• Flooz.com until it held enough in reserve to cover possible fraudulent orders. 
• This caused Flooz.com's cash flow to break down, as it was under obligation to pay Internet retailers who were still accepting flooz as payment for online purchases.
• In 1999, digital currency was like a gift card without a store to back it’s value. 
• In the end, the overall consumer reaction was “why?”

Senior executives refused to confirm the suggestion, and blamed the company's collapse on the slump in the tech sector. 

Chief Executive Robert Levitan

                  Has admitted that fraud had become a problem. Levitan is reported to have said that financial institutions were refusing to pass on revenue from payments made using flooz to the company. Flooz went bankrupt in August 2001 along with its competitor Beenz.com.

boo.com

Boo.com

Boo hoo: “ Learning from the largest European dot-com failure

Company Background

                    Boo.com was a European company founded in 1998 and operating out of a London head office, which was founded by three Swedish entrepreneurs, Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Malmsten and Leander had previous business experience in publishing where they created a specialist publisher and had also created an online bookstore, bokus.com, which in 1997 became the world's third largest book e-retailer behind Amazon and Barnes & Noble.

 boo.com CEO Ernst Malmsten,

Company Vision

              The vision for Boo.com was for it to become the worlds first online global sports retail site. It would be a European brand, but with a global appeal. Think of it as a sports and fashion retail version of Amazon. At launch it would open its virtual doors in both Europe and America with a view to "amazoning the sector". Note though that in contrast, Amazon did not launch simultaneously in all markets. Rather it became established in the US before providing local European distribution through acquisition and re-branding of other e-retailers in the United Kingdom and England for example.

The boo.com Brand Name

                  According to Malmsten (2001), the boo brand name 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 for $2,500 from a domain name dealer.

                 According to Rob Talbot, director of marketing for Boo.com, Boo were "looking for a name that was easy to spell across all the different countries and easy to remember ... something that didn't have a particular meaning".

Brief Description

Target Market

           The audience targeted by boo.com can be characterized "young, well-off and fashion-conscious"18 to 24 year olds. The concept was that globally the target market would be interested in sports and fashion brands stocked by Boo.com.

                The market for clothing in this area was viewed as very large, so the thought was that capture of only a small part of this market was required for boo.com to be successful.

Some boo.com Products

Making the Business Case to Investors

                When the site launched on 3rd November 1999, around 50,000 unique visitors were achieved on the first day, but there were only 4 in 1000 placed orders (a 0.25% conversion rate). Showing the importance of modeling conversion rate accurately in modeling business potential. This low conversion rate was also symptomatic of problems with technology. It also gave rise to negative PR. One reviewer explained how he waited: "Eighty-one minutes to pay too much money for a pair of shoes that I still going to have to wait a week to get?" These rates did improve as problems were ironed out “ by the of the week 228,848 visits had resulted in 609 orders with a value of $64,000.

                In the 6 weeks from launch, sales of $353,000 were made and conversion rates had more than doubled to 0.98% before Christmas. However a relaunch was required within 6 months to cut download times by 6 months and to introduce a "low-bandwidth version" for users using dial-up connections. This led to conversion rates of nearly 3% on sales promotion.

Sales results were disappointing in some regions with US sales accounting for 20% compared to the planned 40%.

            The management team felt that further substantial 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. Turnover was forecast to rise from $100 million in 2000/01 to $1350 million by 2003/4 which would be driven by $102.3 million in marketing in 2003/4. Profit was forecast to be $51.9 million by 2003/4. 

Software Start ups

Some boo.com Strategies

Having Domain Languages

Boo.com Problems

boo.com competitors:

•  2010 ushered in a new era of fashion e-commerce, with a focus on exclusive deals and brands. Gilt, an exclusivity giant, provides insider access to today’s top designer labels at up to 60% off retail. 
• Jack Threads, now owned by Thrillist, is another online shopping experience providing members-only prices.
•  Both Gilt and Jack Threads sell apparel, shoes and accessories from high end fashion brands. Supply, “a growing community of people discovering the products they love,” has a particular niche in helping social consumers find and curate clothing and accessories.

The End of boo.com

              The end of boo.com came on May 18th 2000, when investor funds could not be raised to meet the spiraling marketing, technology and wage bills.

Source: Prepared by Dave Chaffey from original sources including Malmsten et al (2001) and New Media Age (1999).

Malmsten, E., Portanger, E. and Drazin, C. (2001) boo hoo. A dot.com story from concept to catastrophe. Random House, London, UK.

New Media Age (1999) Will boo.com scare off the competition? Author Budd Margolis. New Media Age. July 22 1999. Online only.                 

               On May 18th 2000. Half the investment was raised, but this was too little, too late, and at midnight, less than a year after its launch, Boo.com closed. The headlines in the Financial Times, the next day read: "Boo.com collapses as Investors refuse funds; Online Sports retailer becomes Europe's first big Internet casualty".

              The boo.com case remains a valuable case study for all types of businesses, since it doesn't only illustrate the challenges of managing E-commerce for a clothes retailer, but rather highlights failings in E-commerce strategy and management that can be made in any type or organization.

pets.com

pets.com

Pets.com Failure and Its Causes

Pets.com sold pet accessories and suppliesdirect to consumers over the World Wide Web. The site was launched in November 1998, founded by company web developer Greg McLemore.

pets.com CEO Julie Wainwright

 It rolled out a regional advertising campaign through TV, print, radio and yet a Pets.com magazine. 

The company was known for its wildly popular mascot,

 the Pets.com sock puppet, and Pets.com site design had attained several advertising awards.

Welcome Pages

Some of pets.com Product

  

                 

                Pets.com is a former dot-com enterprise that ceased operations in November 2000. The company went public in February 2000; the former NASDAQ stock symbol was IPET. Pets.com made significant investments in infrastructure; these resulted in the company needing a critical mass of customers to break even. Its management maintained that the company needed to get to a revenue run rate that supported this infrastructure buildout. 

             They believed that the revenue target was close to $300 million to hit the breakeven point and that it would take a minimum of 4 to 5 years to hit that run rate. This time period was based on growth of Internet shopping and the percentage of pet owners that shopped on the Internet.

 Unique Selling Proposition

             Pets.com never had a unique selling proposition. There is no reason to convince consumers to buy pet foods and accessories through the site. Since it is available within neighbourhood, purchasing online is inconvenient as customers have to wait for days to receive their orders. The cat may already poop all over the floor when the cat litter arrived. There is no benefit regards price nor convenient.

              By fall of 2000, after the bursting of the dot-com bubble, the Pets.com management and board realized that :

they would not be able to raise further capital. 

          However when PetSmart offered less than the net cash value of the company, Pets.com's board turned down that offer. Pets.com stock had fallen from over $11 per share in February 2000 to $0.19 the day of its liquidation announcement. While the offer from PetSmart.com was declined, some assets, including its domain, were sold to PetSmart.com. The pets.com management stayed on to provide an orderly wind down of operations and liquidation of assets.

The poor business plan of company led to Pets.com failure

• The bubble burst because of a combination of events, including mass overvaluations and unsustainable business models. 
• Entrepreneurs were wooed by the future of technology, and tons of startups never had a chance at profitability. 
• Similarly Pets.com (a pet supplies store with wildly annoying commercials) shut down in 2001, despite creating a notable presence in pop culture.
•   First of all, Pets.com had overestimated the market trend. 
• The company optimistically assumed that the revenues would grow rapidly and allow them to hit their rate.
•  However, the estimation was based on the current market without analyzing the future trend and risk.
•  This unsustainable business model facing downfalls when dot-com failure.
• The company did not bring up a good proposal in opposing its competitors. 
• Pets.com advertised extensively and selling its products at low prices to maintain competitive.
•  High cost of delivering and low profit margins caused the company facing crisis in generating revenues. 

That makes them in nine months after securing $82.5 million in investment the company went bankrupt.