CASE STUDY: BOO.COM ALL IS NOT ALWAYS RIGHT Company Overview Founded in 1999, Boo.

com launched with the goal of being the world's "first truly online retailer of sportswear and fashion", and was billed as one of Europe's hottest e-commerce ventures. Boo.com had set the record as Europe's best-funded European Internet Start-up, receiving $125 million of funding, arranged through J. P. Morgan, and included high profile investors such as Bernard Arnault, Chairman of LVMH (owns Louis Vuitton and Christian Dior) and 21 Investimenti (Benetton Group), among others. After a high profile launch, the company was hindered by technical problems that delayed the site going live by five months (until November 1999). On going live, Boo.com entered six markets: US, England, Sweden, Finland, Germany and Denmark. They intended to add France, Italy and Spain within a few months, and eventually debut in Asia, as well as create a kid's site. However, within six months Boo.com collapsed through lack of funds, due to its poor performance and inability to build a customer base, and the resulting loss of investors' confidence. Value Proposition According to Kajsa Leander, founder and Chief Marketing Officer of Boo.com, "our marketing thrust is not based on prices, it's about range and convenience. If a clothing brand is on the Boo site, it means all that brand's product line is available, not the limited range you might get at most London fashion shops". Boo.com provided a range of 18 fashion and footwear brands including DKNY, Puma, Everlast, and Converse. They believed that the limited launch of direct online sales operations by fashion brands left room to establish a first-mover advantage and develop a market leading online fashion hypermarket. BOO.COM - TIMELINE AND MAJOR MILESTONES 1999 Mid year - Raises funding of $125 million November - Site goes liv, Multi-million pound advertising campaign created by BMP DDB 2000 January - First sign of problems - redesign site, sack 20% of staff, sell stock at 40% discount February - Announces it has only 500,000 unique visitors May - Appeals for $30 million more funding - fails and appoints KPMG as liquidator. Company is put up for sale.

Sources of Value & The Failure of Boo.com Their strategy was to design an innovative website with interactive graphics to appeal to both sport and fashion enthusiasts. Visitors could search items by sport, brand, colour, price or style, with the ability to rotate products and zoom-in on fabrics, stitching and colour. 3-D product images were accessible in all colours and styles, ready to stock in a shopping cart and mix-nmatch on a rotating sex-specific mannequin. To transcend web shopping's impersonal stigma, the company devised a personality called Miss Boo, an animated personal shopper who guides site visitors and offers remarks. To build customer loyalty, they established the Player's Club (or Leisure Lounge in the UK), a loyalty scheme to reward frequent buyers, and developed 24-hour customer service teams in four world-wide offices. Boo.com also published content in an online style magazine, including interactive games to attract purchasers. All orders were to be delivered within 5 working days in Northern Europe and the US from distribution centres in Munich, Germany and Louisville, Kentucky. However, Boo made some fundamental mistakes. First, a large portion of its potential market was unable to use boo.com's site because the website design (extensive graphics, pop-up windows, 3-D images) was too advanced for most computers and access was frustratingly slow. It required a high bandwidth Internet connection that was only available to 1% of European surfers and 2% in the US. In addition, the site was poorly structured and difficult to navigate, and according to Jim McNiven, CEO of Kerb, an award winning web design company, Boo.com was a "mish-mash when it when live............ it didn't seem obvious what you were supposed to do".

In January 2000, Boo redesigned its website to make it easier to navigate, and added a version devoid of pop-up windows and graphics. The changes also gagged Miss Boo and a paper catalogue was printed for those who want to buy offline. However, the early bad experience and negative word-of-mouth scared off many online shoppers who lost confidence as Boo.com had developed a reputation as a cumbersome and slow site, even though it had become simpler and faster. There were also fulfilment and customer service problems. Although customers received the purchased items within a few days, many complained that they received the wrong items. In addition, these 'mistakes' could not be corrected easily. Customers had to demand a refund, and then re-order the items again. Obviously, once the money was refunded customers did not risk going through the frustrating and inconvenient process again. Besides these issues, there continues to remain a doubt whether the basis of Boo's value proposition was compelling enough in the first place. First of all, prices were not discounted, and secondly, an Internet alternative to real-world shopping for high fashion clothing, misses many aspects that tend to be valued by Boo.com's target audience of the young and trendy shoppers. Traditional fashion shopping provides sources of value through its social experience and entertainment, whereby people enjoy wondering around shops, trying on different styles, getting their friends' opinions, and the feeling and image associated with walking into a high fashion store. Boo's value proposition failed to deal with these issues. Brand-Building Strategy Boo.com was quite successful in generating interest and creating awareness. The name was chosen on the basis that it is "simple, catchy and easy to remember and spell" and could be trademarked in 56 countries. There was a lot of hype surrounding the start-up due to the amount of money invested in the company, and the high-profile investors involved. Boo quickly burned cash on PR and advertising, spending $15 million on an advertising campaign with BMP DDB, which received a mixed response. Adverts appeared on TV, cinemas and magazines such as GQ, ESPN Magazine, Rolling Stone, Vogue, and Elle. Although they attracted traffic, customers soon discovered the site's frustrating flaws, resulting in low conversion rates, and with all the hype, negative word-of-mouth spread quickly. Conclusion Boo.com failed to provide a compelling value proposition, and did not focus on target customer benefits. Instead of overhyping the convenience they offer, Internet companies must remind themselves what customers miss about in-person shopping and compensate with true added value. Boo.com also failed to address basic customer needs of a simple, easy-to-use, quick-toload site, and should have scaled back the technology to ensure as many people as possible could browse the site.

Instead, they focused on advertising the brand and not the less glamorous, but vital, areas of brand-building, such as creating a positive end-to-end customer experience and making each customer contact pleasurable and memorable, and ensuring goods are available and delivered as promised. As a result, they were unable to build a critical mass of buying members needed to generate revenue to offset the steep set-up costs. Another important lesson is the need to be quick to market must be balanced against a company's readiness. Boo was very ambitious to launch in six countries simultaneously, without testing their business model. Unfortunately, this only served to increase set-up costs as well as investors' expectations - both of which accelerated Boo's downfall as things started to go wrong. As a result, Boo is 'branded' as the ultimate Internet failure. Brand building includes all aspects of brand communications, including the brand impression given by the implementation and experience. A poor brand experience on the first visit drives potential customers to click off and not return, and also leads to a lack of confidence on the part of employees (high-profile employees defected, including Dean Hawkins finance director) and investors, throwing everyone into panic, which reflected on all aspects of the operations and eventually destroyed the business. Evaluate the initial success factors and then the reasons for failure of Boo.com