Boohoo - a Dotcom Story

Only available on StudyMode
  • Topic: Venture capital, Dot-com bubble, Dot-com company
  • Pages : 7 (1823 words )
  • Download(s) : 54
  • Published : May 28, 2013
Open Document
Text Preview
Boo.com or popularly known as ‘Boohoo’ now was a British Internet company founded by Swedes Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Launched in the Autumn of 1999, selling branded fashion apparel around the globe over the internet; the pioneers of online shopping as we are so used to and familiar with.

AN OVERVIEW:

Ever needed a lesson on how not to run a business?
That is exactly what boo.com provides as a lesson to all budding entrepreneurs. From its first conception in 1997 to its eventual collapse in 2000, the book follows the roller-coaster ride that was boo.com. Boo.com was founded by Ernst Malmsten and Kasja Leander and was one of the few European companies that appeared during the dot com bubble. And hopefully it will serve as an example for future generations to be careful when it comes to placing expectations on young founders and new technology. The company grew at such a rate that the co-founders Ernst and Kasja simply could not cope with it. Young as the founders were, their only discernible skills appeared to be in forging grand ideas and fundraising. Unfortunately, with the economy being what it was at this time many companies invested in internet ventures with the hope of a quick dollar. Under these circumstances the downfall of the company was pretty much a foregone conclusion, although it is tempting to think about the many 'what if?' scenarios it presents in our minds. Boo.com was overwhelmed with problems and mismanagement from the start. Its website relied heavily on Javascript and Flash which was really slow to load at a time when dial-up internet usage was the norm among the populace round the world. Boo.com spent a lot to market itself as a global company but then had to deal with different languages, pricing, and tax structures in all the countries it launched its website.

The company also mysteriously decided to pay postage on returns, but even more importantly, sales never reached expectations. The company spent $135 million of venture capital in just 18 months and it was placed into receivership on 18 May 2000 and liquidated. The company’s goals to dominate the world’s global online retail sales with its virtual doors open throughout Europe and America fell through the roof by the end of its 1st year since launched globally.

Malmsten (2001):

“The ‘BOO’ brand name originated from film star Bo Derek; best known for her role in 1979 Blake Edwards film 10. The domain name ‘bo.com’ was unavailable, but adding an ‘o’, they managed to procure the domain ‘boo.com’ for $2,500 from a domain name dealer.”

Rob Talbot, director of marketing for Boo.com:

“Boo were “looking for a name that was easy to spell across all the different countries and easy to remember ... something that didn't have a particular meaning”.

ANALYSIS:

The market for clothing was viewed as very large venture at that time, so the idea was to capture only a small part of this market, which guaranteed success in the founder's mindset. They listed brands like Polo Ralph Lauren, Tommy Hilfiger, Nike, Fila, Lacoste and Adidas. The proposition involved sports and fashion goods alongside each other.

The market on the basis of imminent success was indicated by New Media Age (1999) where it was described as:

“The $60b USD industry is dominated by the Gen-X'ers who are online and according to market research in need of knowing what is in, what is not and a way to receive such goods quickly. If Boo.com becomes known as the place to keep up with fashion and can supply the latest trends then there is no doubt that there is a market, a highly profitable one at that for profits to grow from.”

The growth in market was also supported by retail analysts, with Verdict predicting online shopping in the United Kingdom to grow from £600 million in 1999 to £12.5 billion in 2005.

Boo.com wanted to develop an easy to use experience which re-created the offline shopping experience as far as possible;...
tracking img