There are many very successful and e-commerce companies such as eBay, google, Yahoo, etc in the recent years. These mega organizations has redefined the way that big businesses should be venturing into and they makes multi-billions dollars of profits over the years. However, there are also some infamous e-commerce companies that failed miserably during the dot.com boom in the 1990s.
Boo.com was a European company founded in 1998 and operating out of a London head office, which was founded by three Swedish entrepreneurs, Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Malmsten and Leander had excellent previous business experience in publishing where they created a specialist publisher and had also created an online bookstore, bokus.com, which in 1997 became the world’s third largest book e-retailer behind Amazon and Barnes & Noble. Boo.com launched in the autumn of 1999 selling branded fashion apparel over the Internet; however, after spending $135 million of venture capital in just 18 months, it was placed into receivership on 18 May 2000 and liquidated.
There are several causes of boo.com failure that had been identified and studied:
Problems with user experience and technology visibility
The site relied heavily on JavaScript and Flash technology to display pseudo-3D views of wares. The first publicly released version of the site was fairly hefty—the home page alone was several hundred kilobytes which meant that the vast majority of users had to wait minutes for the site to load. The complicated design required the site to be displayed in a fixed size window, which limited the space available to display product information to the customer. Navigation techniques change as the customer navigate into different section of the website, which appealed to those who were visiting to see the website but frustrated those who simply wanted to purchase clothes.
Timing
The fundamental problem was that the company was following an extremely aggressive growth plan, launching simultaneously in multiple European countries. This plan was founded on the assumption of the ready availability of venture capital money to see the company through the first few years of trading until sales caught up with operating expenses. Such capital ceased to be available for all practical purposes in the second quarter of 2000 following dramatic falls in the NASDAQ presaging the "dot crash" following the Dot-com bubble.
Bad Cost Control
Boo.com's founders famously spent their way through £125 million ($188 million) in just six months. Boo.com's sales did not match expectations, due partly to the very high number of products returned by customers. Poor management and a lack of communication between departments resulted in costs spiraling unchecked—the effectiveness of an eye-catching (and expensive) ad campaign was limited. Staff and contractors were recruited in large numbers, with a lack of direction and executive decision about how many and what were required. This resulted in a crippling pay-roll cost. One contractor alone was reputed to be earning over £100 an hour.
Boo.com was a European company founded in 1998 and operating out of a London head office, which was founded by three Swedish entrepreneurs, Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Malmsten and Leander had excellent previous business experience in publishing where they created a specialist publisher and had also created an online bookstore, bokus.com, which in 1997 became the world’s third largest book e-retailer behind Amazon and Barnes & Noble. Boo.com launched in the autumn of 1999 selling branded fashion apparel over the Internet; however, after spending $135 million of venture capital in just 18 months, it was placed into receivership on 18 May 2000 and liquidated.
There are several causes of boo.com failure that had been identified and studied:
Problems with user experience and technology visibility
The site relied heavily on JavaScript and Flash technology to display pseudo-3D views of wares. The first publicly released version of the site was fairly hefty—the home page alone was several hundred kilobytes which meant that the vast majority of users had to wait minutes for the site to load. The complicated design required the site to be displayed in a fixed size window, which limited the space available to display product information to the customer. Navigation techniques change as the customer navigate into different section of the website, which appealed to those who were visiting to see the website but frustrated those who simply wanted to purchase clothes.
Timing
The fundamental problem was that the company was following an extremely aggressive growth plan, launching simultaneously in multiple European countries. This plan was founded on the assumption of the ready availability of venture capital money to see the company through the first few years of trading until sales caught up with operating expenses. Such capital ceased to be available for all practical purposes in the second quarter of 2000 following dramatic falls in the NASDAQ presaging the "dot crash" following the Dot-com bubble.
Bad Cost Control
Boo.com's founders famously spent their way through £125 million ($188 million) in just six months. Boo.com's sales did not match expectations, due partly to the very high number of products returned by customers. Poor management and a lack of communication between departments resulted in costs spiraling unchecked—the effectiveness of an eye-catching (and expensive) ad campaign was limited. Staff and contractors were recruited in large numbers, with a lack of direction and executive decision about how many and what were required. This resulted in a crippling pay-roll cost. One contractor alone was reputed to be earning over £100 an hour.
The boo.com case remains a valuable case study for all types of businesses, since it doesn’t only illustrate the challenges of managing E-commerce for a clothes retailer, but rather highlights failings in E-commerce strategy and management that can be made in any type or organization.
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