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Business The concept is coming right at 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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    With high costs and politicking, was bound to fail

    YESTERDAY (May 18), our sister magazine Lucire reported the closure of the web�s highest-profile fashion retailer, Set up in 1998 as the last word in global fashion retail on the web, with three-dimensional images of fashion items, made numerous bold claims, not least securing $120 million in finance when starting. Luminaries including Bernard Arnault, chairman of LVMH were amongst the financiers. 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�s 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, 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 for�but 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 The three-dimensional previewing technologies were innovative but for the markets in which 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 didn�t seem reasonable. Haven�t 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 vision�or, more accurately, that there was a vision but no strategy to achieve it. �There 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,� he said.
       At this point there was every indication that would stumble. JY&A Consulting�s own identity and branding model said as much.
       When JY&A Media, CAP�s publisher, received pre-launch information from, it found lofty ambitions behind the plan. While we can�t detail what this said, we can say that we felt there were problems with the company�s branding based on the graphics used in the letter.
       Between 1998 and 1999, hired software companies to design the technology. However, the result was too advanced. While slick, it lacked user-friendliness. To add further embarrassment,�s site did not work with Apple Macintoshes upon launch�something that shocked many web professionals, to whom testing on both Mac and Windows systems is vital. It was sluggish and never lived up to�s hype.
       The much-postponed launch (originally slated for May 1999, but which actually occurred in November) did not help things. 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�s restructuring plan presented on May 17, the company proposed laying off 100�but 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 it�s 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 was but we didn�t know why we needed it, particularly in countries like Great Britain where only a tiny percentage of people can�t get to a high street shop. is still a good idea. In 2000, things were looking up at the simplified, 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, might have stood a chance using its current approach of approaching web veterans and consultants. We don�t think the $30 million wanted for its restructuring would have saved it, but a carte blanche and a substantially different team might have done the trick.
       Today�s 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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