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.