Forrester Why did Boo flame out so fast?

Poor execution of good idea, says Dr Therese Torris of Forrester Research

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Boo.com quickly burned cash on PR and advertising

Boo.com's first financing round of E120 million - raised from prestigious investors like Europ@web, Morgan Capital, and Goldman Sachs - was the largest-ever private investment in a Web retailer headquartered in Europe. But within six months, boo.com exhausted these funds on communication - for example, forking out 25 million in offline advertising through TV, radio, and fashion magazines like Elle.

Sales growth failed to meet expectations

Although audience and sales tripled during the site's first quarter, boo.com failed to meet sales targets. In January, the firm fired 20 per cent of its employees and began losing key executives. February results - half-a-million unique visitors and sales below 1 million per month, despite targeting 18 countries in seven languages - disappointed investors like Benetton's 21 Investimenti, which declined to participate in further financing rounds.

Strategy flip-flopped

Between interviews, boo.com's media-friendly leaders Ernst Malmsten and Kasja Leander steered the firm through several rapid about-faces. Originally positioned as a lifestyle site competing on premium brand selection and not on price, the site switched to offering 40 per cent discounts by January. And although the site revelled in rich content and rich media at launch, by April it had ditched its fashion newsletter, gagged virtual assistant Ms. Boo, and launched paper catalogues as a low-tech alternative to its three-dimensional product presentation online.

Poor execution of a good idea

Why did boo.com flame out so fast? The firm mistimed and failed to execute on a good idea: to enhance clothing presentation through online innovation.

Boo.com started by keeping most of its target audience out

Boo.com advertised how the site's advanced 3D technology allows users to spin a product around for a full view. But 99 per cent of European and 98 per cent of US homes lack the high-bandwidth access needed to easily access such animations.

Its reputation as a cumbersome and slow site still sticks even though it's now simpler and faster.

Innovation dried out

Boo.com's technology not only posed problems, but it also ceased to provide differentiation. Three-dimensional product presentation, zooming, colour changes, and virtual try-on can be found on sites like landsend.com; other sites can acquire these features from vendors like NxView or Xippix.

Boo.com belatedly addressed basic customer needs

Boo.com's hip design confused users with a flurry of orange windows and irrelevant comments from Ms. Boo. By the time the site added necessary attributes like privacy protection and persistent product navigation bars, many viewers had already fled.

Lesson for European dotcoms - get real

With funds drying out, boo.com's best bet is to restructure and sell its remaining assets - a brand and a now-functional multilingual site - to a competitor like Fogdog that is rich in virtual cash and seeking a European presence. Lessons for all Dot Coms:

  • Stop experimenting in the limelight
    By communicating too soon, boo.com earned a bad name for itself instead of building brand value. Sites must conduct more professional site testings and act on their conclusions before raising their visibility.
  • Bring in passionate experts
    Retail sites not only miss the "touch and feel" factor, they also often fail to generate trust and a feeling of being acknowledged as a client. Sites should pass on virtual advisors in favour of flesh-and-blood experts like ChateauOnline's wine taster Deluc.
  • Focus on target customer benefits
    Instead of overhyping the convenience they offer, Dot Coms must remind themselves what customers miss about in-person shopping and compensate with true value: meaningful personalization but also discounted prices.
  • ®

Tune in and turn on to more tales of the Bubble Economy atCash Register, our channel for e-greedy people.

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