E-Commerce Blog

Read Case 5.3 and answer the questions

Founded in 1998 by 3 Swedish entrepreneurs, Boo.com was a European online clothes retailer. It operated out of a London. Their vision was  « to become the world-leading Internet-based retailer of prestigious brand leisure and sportswear names ». But on 18 May, the company was bankrupt. This company is a valuable case study for the failings in e-commerce strategy and management.

Which strategic marketing assumptions and decisions arguably made Boo.com failure inevitable? Contrast these with other dot-com era survivors that are still in business, for example lastminute.com, egg.com and firebox.com

First of all, Boo.com wanted to become the leader in online global sports clothes. This is why they decided to launch the website both in Europe & America. That was their first mistake. They invested too much money instead of waiting for the sales to generate revenues and then develop on other markets.

Second, Boo.com did not take care of the environmental analysis. They neglected the analysis of the technological environment. Indeed they didn’t consider the fact that in the late 90’s, not everybody had broadband and most people were still using dial-ups. Moreover, people always had to download softwares to view web pages.

Third, the company assumed that clothing has more standardized sizes with less need for a precise fit than designer clothing. But they omitted the fact that online clothes and trainers have a higher rate of return and their target (young, fashion counscious, 18-24yo) is not associated with the mail market.

Boo.com also underestimated the cost of implementing the technology because it needed to fit with the stock control and distribution process.

To conclude, I would say that Boo.com definitely wanted to do too much and both the market and them were not ready.

Boo.com didn’t really have a competitive advantage in terms of price or products originality such as lasminute.com and firebox.com.

Using the framework of the marketing mix, appraise the marketing tactics of Boo.com in the areas of Product, Pricing, Promotion, Place, Process, People and Physical Evidence.

Product: The choice of Boo.com as a name was a good idea, because it’s easy to memorize and easy to spell for many countries. Regarding the products, they had trendy brands, bought by a lot of young from 18yo-24yo, such as Nike, Fila, Adidas and Tommy Hilfiger. However in their product range, they had Lacoste, Polo Ralph Lauren which are more classic brands and more expensive and I think it’s not really appropriate for the target.

Pricing: The price was a big problem. Usually an online website propose lower prices but in this case it would have affected the brands’ images especially in the late 90’s. Moreover people were not ready to pay the same price and wait to get the product.

Promotion: Boo.com communicated through TV, Newspaper and public relations. I think that newspapers were not appropriated for the target. Moreover they created a magazine called “Boom” which didn’t even support the sales. It was only a fashion magazine and readers couldn’t see the company’s products. That is a really important mistake they made, especially considering the high cost of the magazine.

Place and Physical Evidence: The distribution channel used was the Online Channel. The place wasn’t appropriate at that time because buying clothes online wasn’t in people’s habits. Moreover there was a classic channel conflict. Indeed it was difficult for them to get fashion and sports brands that they could offer through their website. These brands already had their retailers.

Process: the process for buying products online was too long and complicated.

People: Boo.com’s activity could be split in 27 areas, which means that there was a large amount of workers needed. That represent’s a high cost in human ressources (salaries…).

In many ways, the vision of Boo’s founders were « ideas before their time ». Give examples of e-retail techniques used to create an engaging online customer experience which Boo adopted that are now becoming commonplace.

One of the ideas was to recreate the offline shopping experience as far as possible. Thus they created a virtual salesman who guides consumers in their shopping process. That was really innovative at that time but now it’s commonplace. They also offered the consumer the possibility to see the product in a 360° angle and provide them with information. Nowadays, if people cannot see at least a picture of the product online, they won’t buy it. The more written and visual information you provide, the more likely you are able to sell products. One other idea was to make people sign-up on the mailing list to inform them of the launch of the website. Nowadays, it’s important for online retailers to get people’s emails and inform them about new products, special offers. Finally they were the first online clothes retailer to think about being only online.