RealTime IT News

Boo.com Collapse Blamed on Poor Execution of Good Idea

[May 18] The collapse of European online sportswear retailer boo.com was the result of poor execution of a good idea, according to analysis by Forrester Research.

In a memo distributed to journalists, Forrester's Dr. Therese Torris asks: "Why did boo.com flame out so fast?" -- and answers by saying that the firm failed to do what it promised, namely to enhance clothing presentation through online innovation.

"Its reputation as a cumbersome and slow site still sticks even though it's now simpler and faster," says Dr. Torris.

After failing to secure a further round of funding, boo.com called in receivers KPMG to wind up the company and salvage as much value as possible from it. 300 staff will lose their jobs, 200 in London and the rest in New York, Stockholm, Munich, Paris and Amsterdam.

The collapse had been approaching for several weeks, with sales growth failing to meet expectations and investors growing increasingly nervous. An overspend on PR and advertising also contributed to the downfall, with $25 million burned offline on TV, radio, and fashion magazines like Elle in a six-month period.

However, by far the biggest factor was the extraordinarily complicated design of the boo.com site, with fussy, pop-up windows, pictures so tiny they needed to be zoomed even to identify color, and a "dressing-room" feature that disappeared whenever the user chose to try on a new item.

Seeing a breathtaking quarter of a billion dollars spent a such a venture, experts now fear that e-commerce will be given a bad name, at least in Europe. The major backers of boo.com included Europ@web, the investment vehicle of French luxury goods group LVMH, and 21 Investimenti, funded by Italian clothing giant Benetton.

40 per cent of boo.com's equity was held by partners Ernst Malmsten and former model Kajsa Leander. Malmsten told the Financial Times that he believed the pair had been "too visionary," wanting perfection but losing control of costs.

Although boo.com had backtracked in recent weeks, bringing out a paper catalog to supplement its online presence, bankruptcy was inevitable as funding dried up.

The lessons for other online retailers appear to be: keep costs down, create a user-friendly design, and make sure your backers never lose their nerve.