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An overview of the rise and fall of Boo.com

21 Feb 2017Samples

The first boom of fashionable shops in Network happened at the end of the XX century.

People who are acquainted with the history of network trade’s development remember the time the name Вoo.com appears in their minds. The site had to take orders of clothes in seven languages and in eighteen currencies. It had to bring joy to a client by pleasant electronic guide and give possibility to every interested person to choose a thing not walking away from a keyboard. Virtual models, locker rooms and pleasant dialogs should have turned a usual scurry about shops into the pleasant and simple adventure. 

The project of Boo.com

The project of Boo.com can be compared to Titanic in the same ambitious, the same aspiration, same gigantism. And as Titanic, it went to the bottom, scuppered by the real difficulties. It became the monument of short-sightedness and excessive optimism of his creators.

The company Boo.com was founded in London in 1999 by the Swedish model Kajsa Leander and her friend and partner, former literary critic Ernst Malmsteen. They sold their former e-commerce shop Bokus.com and decided to make more money by creating the most successful company. The essence of their grandiose idea consisted in creating the virtual analogue of the department store, like Harvey Nichols or Selfridges that offered the possibility to acquire the clothes of the known designers and sporting brands Nike, North Face, Umbro and others.

Enormous facilities were used for project realization. The partners succeeded to get the interest of such companies, as Goldman Sachs, LVMH and Benetton, that invested in the enterprise more than 100 million pounds. At the moment of start the cost of the company was more than 200 million. Nevertheless, Leander and Melmstem obviously over-estimated the sizes of market and possibility of introduction. In eighteen months boo.com went bankrupt and spent all money of investors.

Today it becomes quite obvious, that the project realized during the years, when electronic commerce hardly struck root in our life, was doomed. Considerable charges on software necessary for shop functioning made it unprofitable.

At the same time a commodity row was not very special, and the cost of delivery was very high. That’s why an idea did not cause large interest.

Decisions and assumptions that ultimately led to boo.com’s failure

There are a lot of factors that led to boo.com’s failure At the beginning Boo.com tried to become a global brand, with all following expenditures for the project of a similar scope. As a result of underestimation of specific and scaled environment, the opening of website was postponed. Expenditures exceeded all the conceivable limits, and most producers of sporting clothes did not express enthusiasm concerning joint work. One of the reasons of such ignoring was the sporting clothes norm of income of 10% (at a average income in 30%) that, naturally, could hardly please the most producers.
Moreover, the founders appointed the salary of $ 150 000 a year to each other. They spent $ 400 000 for their personal needs. 

However, it is necessary to mention that the founders took care of their employees very well. Four hundred twenty IT-professionals got well-paid positions in a company which at that moment had no income. Free mobile telephones, various business attributes, and credit cards were given as gifts.

The plan of Boo.com planned the purchase of publicity areas in all accessible spheres, including television and fashionable magazines such as "Elle". For the prosecution of "Miss Boo" people were invited to London from New York.

Specialists said that the principal reason of failure was absence of the worked strategy at presence of only common vision.

An analysis of what can be learned from boo.com’s approach to e-commerce

The idea of boo.com to provide the possibility to acquire clothes in a network round-the-clock, carrying out rapid delivery was quite good, but it has appeared not at the right time. That’s why the followers took into consideration the errors of the predecessors. As for boo.com, the founders made another languid attempt to get on feet, but failed. 
Everything is changing today.

The internet became a usual communication mean to give and receive information, as well as phone. People don’t fear to use credit cards for payment for purchases through Network, and technology necessary for site’s work carrying out a trade became cheaper and more accomplished.

Nowadays all the necessary pre-conditions for a development of network trade exist.

The best opportunities of the transition through Network were given to the companies. Customers estimate a commodity only in the picture like in the catalogue. One of the most successful online shops is the site of American company-producer of underclothes “Victoria`s Secret”.

According to the information of its representatives about 40% of its turnover is from the Internet. The success of this project is not accidental. A company takes great efforts for its promotion. In particular, a few very successful online translations of the annual show with the participation of famous models were conducted.
Net-a-porter.com recently got a reward as the best electronic shop (UK Fashion Export Award). It offers to the buyers the products of known and prestige brands, from Alberta Ferretti to Viktor & Rolf, and also high-quality services: reviews of fashionable tendencies, news, make-up advice, series of photos and other materials.

Quick delivery, interesting design, correctly neat commodity row, and also the support of the project by the network version of British “Vogue” makes  net-a-porter.com a very successful project. A shop has its own circle of clients in Europe and in the USA (thus 50% of its volume of sales is from foreign countries). Natalie Massanet the founder of this company says that they sell a high fashion in Network on its overall cost. She adds that everybody was sure that it was impossible. 

Also, success accompanies the shops that offer special clothes. They use one of the major advantages of network shops - the possibility to overcome geographical barriers. Thus, an enormous part is characterized by a quickness and possibility of delivery to different parts of the world, exclusiveness, and reliability of presented brands, the perfection of software. 
In conclusion, we must say that according to e-bay statistics, the volume of international sales in the category of clothes was considerably increased during last few years.

References

(1) Kobe, M & Helsen, K 2004, Global marketing management, John Wiley & Sons
(2) Malmsten, E., Portanger, E. and Drazin, C. 2001. boo hoo. A dot.com story from concept to catastrophe. Random House, London, UK.
(3) Acito, F 2006, 'Development of archetypes of international marketing strategy', Journal of International Business Studies, vol. 37, no. 4, pp. 499-508
(4) Dipasquale, S 2002, 'Philip Morris plans $350M in price promos', Advertising Age, August
(5) Kobe, M & Helsen, K 2004, Global marketing management, John Wiley & Sons.
(6) Phillips, P 2007, 'The global facets of marketing: Whether a company is small or large, it is necessary to adopt a global marketing strategy to ensure success in the future', Coatings World, January. 
(7) “Boo hoo!” by Linda Lee available at”www.salon.com/tech/log/2000/05/18/boo/print.html 
(8) “Boo.com Goes Bust” available at  tnl.net/blog/2000/05/19/boocom-goes-bust/

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