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.
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 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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