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Business Boo.com The concept is coming right at boo.com with improved speed and site design, but it's too late to save it from the entry of KPMG as liquidators


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    boo.com boo hoo

    With high costs and politicking, boo.com was bound to fail


    YESTERDAY (May 18), our sister magazine Lucire reported the closure of the webís highest-profile fashion retailer, boo.com. Set up in 1998 as the last word in global fashion retail on the web, with three-dimensional images of fashion items, boo.com made numerous bold claims, not least securing $120 million in finance when starting. Luminaries including Bernard Arnault, chairman of LVMH were amongst the financiers. Boo.com began with sportswear but had an intent to branch out into other types of fashion, once consumers became more familiar with the medium.
       For us, it is no surprise to see the closure. A very different mindset is required for running a web venture and boo.comís highly paid executives indicated to us long ago that this was an old-model company trying to run a new-model business. We have witnessed numerous closures in our 10 years on the internet, and high costs are often to blame. We ourselves have been fortunate in keeping costs under control and finding the right people.
       The web firm sees talented individuals performing multiple tasks and joining together, building alliances and breaking down the job boundaries of old. While boo.com, founded by former poetry critic Ernst Malmsten and former model Kajsa Leander, had admirable global ambitions, it also had highly paid internet executives, former investment bankers and management consultants on its team. Employees within weeks of launch numbered 500. This was an old-fashioned outfit that had been lucky getting the money it asked foróbut the conventional web company is one that starts small and also asks for a few million in start-up capital. Famous names for securing financing are one thing; overdoing it is another.
       Goods were sold at retail, so there was little reason to go with boo.com. The three-dimensional previewing technologies were innovative but for the markets in which boo.com was launched, high street retailers are prevalent. Unless there were a compelling reason, e.g. a niche market, unknown brands, cutting-edge design, the prices commanded by boo.com didnít seem reasonable. Havenít we been told time and time again that web goods are cheaper because of lower overheads?
       A former employee reported in The Daily Telegraph that there was no visionóor, more accurately, that there was a vision but no strategy to achieve it. ĎThere was no induction, no structure, just a huge amount of hard work. And it was all very political from the beginning. People would just try to capture whole departments,í he said.
       At this point there was every indication that boo.com would stumble. JY&A Consultingís own identity and branding model said as much.
       When JY&A Media, CAPís publisher, received pre-launch information from boo.com, it found lofty ambitions behind the plan. While we canít detail what this said, we can say that we felt there were problems with the companyís branding based on the graphics used in the letter.
       Between 1998 and 1999, boo.com hired software companies to design the technology. However, the result was too advanced. While slick, it lacked user-friendliness. To add further embarrassment, boo.comís site did not work with Apple Macintoshes upon launchósomething that shocked many web professionals, to whom testing on both Mac and Windows systems is vital. It was sluggish and never lived up to boo.comís hype.
       The much-postponed launch (originally slated for May 1999, but which actually occurred in November) did not help things. Boo.com was relatively speedy in acting on criticisms, relaunching a scaled-down site. Things began to come right although structurally the rot was already there: it retained 300 employees, according to Malmsten. In boo.comís restructuring plan presented on May 17, the company proposed laying off 100óbut it is felt that the company could have survived on a mere 80 employees. We even say 50 here at CAP Online.
       Every organization requires a vision and a strategy on how to achieve it. While itís not necessary for the strategy to be firmly founded in reality due to changes in the market-place (particularly the web one), basic steps have to be in place. There seems to be some confusion over what that strategy was. And certainly as external audiences, we knew what boo.com was but we didnít know why we needed it, particularly in countries like Great Britain where only a tiny percentage of people canít get to a high street shop.
       Boo.com is still a good idea. In 2000, things were looking up at the simplified boo.com, with rising sales. The site was a lot quicker and the technology easier to grasp. But it was an idea before its time and wrongly structured. Given another five years, when the structures of web firms are established in universities and graduates have a grasp over them, boo.com might have stood a chance using its current approach of approaching web veterans and consultants. We donít think the $30 million boo.com wanted for its restructuring would have saved it, but a carte blanche and a substantially different team might have done the trick.
       Todayís web fashion etailer has to find a niche market, keep its costs under control with a small number of staff, form alliances and remember that simplicity is a virtue. We can learn from these mistakes as this nascent medium finds its limitations. Jack Yan

    Jack Yan is editor of CAP and the chief executive of Jack Yan & Associates. He holds a master's degree in marketing, specializing in identity and branding, and their connections to business performance. He can be reached via the Feedback link below.

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