The Rise and Fall of Boo.com

Boo.com was one of the most widely anticipated e-commerce sites in history. The company planned to sell trendy fashion products at full retail price over the Web, offering such brands as North Face, Adidas, Fila, Vans, Cosmic Girl, and Donna Karan. Boo’s Web site enabled shoppers to view every product in full color, three-dimensional images from any angle. An advanced search engine helped customers search for items by color, brand, price, style, and even sport. The site featured a universal sizing system based on size variations among brands and countries. Visitors were able to question Miss Boo, an animated figure offering fashion advice based on locale or on a specific activity (such as trekking in Nepal). Boo.com also offered free delivery within one week and free returns for dissatisfied customers.

Boo.com’s founders were two 28-year-old Swedish friends, Ernst Malmsten and Kajsa Leander, who had already established and later sold the on-line bookstore Bokus.com, and Patrik Hedelin, an investment banker at HSBC Holdings. They obtained financial backing from a string of prestigious investors, including the investment bank of J. P. Morgan.

Malmsten and Leander set a target date of May 1999 for launching the Web site. Boo planned to develop both its complex Internet platform and customer-fulfillment systems from scratch. Management committed $25 million to advertisements in expensive, trendy, fashion magazines, such as Vanity Fair, and on cable television and the Internet before the Web site had been launched.

There was so much unfinished technical development work that the Web site launching was pushed back several times. With the original advertising campaign long over, observers commented that by raising people’s interest while delaying its opening, Boo.com disappointed and alienated potential customers. Boo’s Web site was finally launched in early November, but the promised mass marketing blitz never materialized.

Developing Boo’s own software proved slow and expensive. The plan required rich, complex graphics so visitors could view products from any angle. The technicians also had to develop an intricate virtual inventory system because Boo maintained very little inventory of its own. Items in Boo’s order basket were actually ordered from the manufacturer, not from Boo, so one customer might have a basket containing items from four or five different sources. The site also had to allow its customers to communicate in any one of seven languages and to convert 18 different currencies and calculate taxes from 18 different countries.

To connect to Boo.com, visitors had to have a minimum 56K connection, but even this was too low for most U.S. and European users to handle all the Boo graphics. Product descriptions were displayed in tiny one-inch square windows, making descriptions not only difficult to read but also difficult to scroll through. The Boo hierarchical menus required patience and precision; visitors making a wrong choice had no alternative but to return to the top to start over again. An especially annoying feature of the site was the constant presence of Miss Boo. She was constantly injected regardless of whether the visitor desired her style advice. Many visitors reacted as they might if they were shopping in a bricks-and-mortar store and had a live clerk hovering over them, commenting without stop. Boo’s Web site performance was terrible. At launch time, 40 percent of the site’s visitors could not even gain access. The site was buggy, even causing visitors’ computers to freeze.

With sales lagging badly and the company running out of cash, Boo began selling clothing at a 40 percent discount and laying off employees. On May 17, 2000, Malmsten hired a firm to liquidate the company. Fashionmall.com purchased the remnants of Boo.com the following month, including its brand name, Web address, advertising materials, and on-line content. Investors had lost an estimated $135 million to $185 million. Many people are still wondering how it could have all gone so wrong so swiftly.

Sources: Michelle Slatalla, “Boo.com Tries Again, Humbled and Retooled,” New York Times, January 11, 2001; “Life and Death: Private Dot-Coms,” The Industry Standard, July 2, 2001; and Andrew Ross Sorkin, “From Big Idea to Big Bust: The Wild Ride of Boo.com,” New York Times, December 13, 2000