Brand Marketing Search Engine

Saturday, April 28, 2007

Internet and new technology failures:

The party’s over

A magazine ad depicting a man vomiting into a dustbin may not be the most conventional tactic to use in order to sell sportswear, but then was hardly the most conventional company. The September 1999 advertising campaign, in which this image appeared, was designed to let everyone know that the first global sportswear site had arrived, in style, and that it was about to take the world by storm. Of course, the reality was rather different.

On 18 May 2000, less than a year after its launch, liquidators from theaccounting firm KPMG were called in to the company’s London headquarters.

After spending millions and attracting relatively few customers, became what The Financial Times referred to as ‘the highest profile casualty among European e-tailing start-ups’.

Although is one of the most obvious and spectacular brand failures of the era – if not all time – it was founded on reasonably secure marketing logic. As Al and Laura Ries write in The 22 Immutable Laws of Branding, ‘the most efficient, most productive, most useful aspect of branding is creating a new category.’ There is no denying that ever since’s Swedish founders Ernst Malmsten and Kajsa Leander had visited Amazon in 1997, they believed this was the key to success. As Malmsten writes in the best selling account of the boo phenomenon, boo hoo:

If we were really to achieve the global impact we hoped for then we had to exploit ‘first mover’ advantage. If you’re first, then you achieve vital recognition as you become identified with whatever you’re selling. You get a lot of free publicity and customer confidence because you’re the leader. It’s then very difficult for the second wave to compete. was a shining example of that. Here was a company that spent almost nothing on marketing before its IPO, but still managed to create one of the best known brands in the world.

When became public knowledge in May 1999, via an article in The Financial Times, Kasja Leander announced the company in these terms:

‘Sportswear is an international market and there are a lot of people in Europe who read about products in US magazines but can’t go over to buy them. This is one of the few sectors of Internet retailing that no one’s done on a large scale and we want boo to be the number one brand.’

So neither Malmsten nor Leander can be accused of ignoring branding. The idea, from the start, was to create a ‘fully branded shopping experience on the Net,’ an online equivalent of high fashion department stores such as London’s Harvey Nichols or New York’s Bloomingdales, only with the main focus on urban and sportswear from hip brands such as Adidas, New Balance and North Face.

However, the brand that really mattered was boo itself. As Malmsten has explained, the aim was to make ‘the name of the store itself as significant as anything you could buy in it.’ Again, this displays solid brand-thinking, and marked boo apart from many other dot.coms that had sprung from the minds of technologists. But the problem was that whatever it can represent, the Internet is technology.

If you are going to create what Malmsten referred to as ‘a gateway to world cool’ (as quoted in a June 2000 Industry Standard article), you need software to make sure people can access the gateway in the first place. In other words, your Web site has to work.

On the first day of its eventual launch, 4 November 1999 (two months after the premature advertising campaign featuring the man vomiting into a dustbin) the problems with the Web site soon became apparent. The site crashed seconds after it went live. And then, when people could finally access the site, the real headaches, both for boo and its customers, began.

One of these headaches related to the heavy use of Flash software, which enabled the site to be animated. Indeed, one of the key features of the site was the virtual shop assistant Miss Boo who was only able to come to life through the use of Flash. However, many Internet users did not have a Web browser that could support this technology. Furthermore, in 1999 most PCs had a 56k (or slower) modem. This meant that the graphics-intensive site, which, as well as the attraction of Miss Boo offered visitors the chance to ‘rotate’ items before making a purchase, was going to be somewhat slow. How slow? Well, on an average computer the home page could take around three minutes to load and that was after having to sit through a lengthy animated introduction. Oh, and if you had a Mac you couldn’t access the site at all.

Small wonder that the leading Internet usability experts, such as the highprofile author and Web engineer Jakob Nielsen, quickly pounced on as the archetypal example of how not to build a Web site. When he first reviewed the site for his Alertbox newsletter in December 1999, Nielsen could hardly believe what he saw:

Instead of making it easy to shop, the site insists on getting in your face with a clumsy interface. It’s as if the site is more intent on making you notice the design than on selling products. Furthermore, it is simply slow and unpleasant. All product information is squeezed into a tiny window, with only about one square inch allocated to the product description. Since most products require more text than would fit in this hole, boo requires the user to use a set of non-standard scroll widgets to expose the rest of the text. Getting to a product requires precise manipulation of hierarchical menus followed by pointing to minuscule icons and horizontal scrolling. Not nice.

Not nice indeed. But then, Alertbox was only distributed to ‘techies’, not the highly fashion-conscious affluent consumers boo wanted to reach. So why worry too much when they had already managed to secure complementary articles in the UK and US editions of Vogue, alongside various newspapers?

Ironically, the company founders’ undeniable talent for publicity was starting to turn against them. Having spent millions on advertising and having generated thousands of column inches in the press, expectations had been inevitably high. While the company succeeded in creating a young and hip image (in 1999 Fortune magazine picked it as one of its ‘Cool Companies’ of the year) it had also placed itself under too bright a spotlight. Alongside attacks in the Internet media regarding the site’s functionality – or rather, lack of functionality – the mainstream press was also starting to pick up on the parties and high living centred around the boo headquarters in London’s Carnaby Street.

Malmsten now maintains that the company’s extravagant reputation ‘masked the reality’ of the sheer amount of work that went on behind the scenes. Indeed, he reckons the 24/7 commitment his staff (or rather, ‘boo crew’) devoted to their task especially around the launch period, hadn’t been seen since World War II. ‘To understand this kind of total devotion to a cause you probably had to be in Britain in about 1940, when car factories were turning out aeroplanes or tanks overnight,’ he writes in boo hoo, with no apparent trace of irony. But however hard everyone in the company was working in November 1999, the atmosphere had changed by the following February.

According to boo’s financial strategist Heidi Fitzpatrick morale was low. ‘We were out every lunchtime getting shit-faced. There was no management and we all went home at six instead of working all hours.’ The reason for such low morale is represented by the figures. In a period of 18 months, the company had managed to get through approximately US $185 million that had been raised from high-profile investors such as Benetton, J P Morgan, Goldman Sachs, the French fashion conglomerate LVMH and the Lebanese Hariri family. How much of this money financed the first-class flights and Krug-swilling lifestyle boo was becoming increasingly famous for is impossible to say.

One thing, however, is for sure. There simply weren’t enough customers. Deterred by a problematic Web site which concentrated on fancy design rather than straightforward product information, few people were willing to make the effort in any of the 18 countries where boo had a presence. In the first month after its November launch boo managed to sell around US $200,000 worth of stock, from which it profited half. Not bad by most ecommerce site’s standards. But then, most e-commerce sites aren’t capable of spending around US $20 million in a single month (as boo did that November). Although sales figures slowly increased, they weren’t doing as quickly as boo had anticipated. Between February and April 2000, total sales were US $1.1 million. Unable to raise any more money from its investors, in May 2000 shut down and filed for bankruptcy.

In their final press release, one of the most famous statements of the era, Malmsten and Leander put their side of the story:

The senior management of has made strenuous efforts over the last few weeks to raise the additional funds that would have allowed the company to go forward with a clear plan. This plan involved a restructuring of the retail operations, the development of an e-fulfilment business using our unique advanced technology and operations platform, and the identification of strategic partners. It is disappointing to both the management and staff alike that we were not able to bring this plan to fruition against the background of steadily-improved trading.

The release concluded by stating: ‘We believe very strongly that in there is a formula for a successful business.’ Unfortunately, not everyone agreed. Among the many dissenters was Philip Kaplan, a 24-year-old New Yorker who launched in 2000 to highlight what he referred to as the ‘ridiculousness’ of many dot.coms. The site quickly attracted hundreds of thousands of visitors, wanting to see which companies were next in line for the scrap-heap. When failed, Kaplan’s response was, to say the least, cynical and his site put a rhetorical question to its visitors.

‘Can you possibly think of anything that is a more eloquent testimony to having your head three feet up your Calvin-Klein-covered ass than to spend tens of million dollars on a start up AND NOT HAVE THE WEB SITE WORK?!’

There are others who take a kinder view though. Unlike the former staff at other doomed companies, many of the original boo team remain loyal to the memory and believe the company would have succeeded if only the investors had supplied more money.

It is also important to realize the wider context. When the news about boo’s demise hit the headlines, the European community remained reasonably confident. This case was viewed as an isolated event, related only to the incompetence and extravagance within boo itself. The reality, however, was that’s failure to survive was not unique. Only months after the front-page headline in The Financial Times ‘ collapses as investors refuse funds’, many others had suffered similar fates.

One of the journalists to have documented’s ill-fortune was the BBC’s Internet correspondent Rory Cellan-Jones. In his vivid account of Britain, Dot.bomb, he considers boo as part of a broader picture:

As other, less flamboyant companies also began to fail, it became clear that boo’s problem was one of timing. Its vision of online retailing had won the support of investors, but neither the consumers nor the suppliers were yet ready to adopt it in significant numbers. When the investors lost faith in that vision, plenty of companies founded on the promise of the revolution were bound to fail. Boo simply got there first because it spent its money more quickly.

The medium was therefore becoming the message, and that message was increasingly one of failure. But boo’s downfall cannot simply be attributed to the delusional late-1990s attitude towards the Internet which only hindsight has amended. Even if boo had been an offline company many of its mistakes would have been near-fatal. For instance, blowing millions of dollars on a risky launch campaign two months before the actual launch would always be a bad move.

Another mistake, ironically enough, could be put down to the company’s obsession with the brand identity itself. The marketing people were often able to overrule the technical team, particularly with regard to crucial decisions regarding the Web site. As a result, the company created one of the most fabulous-looking sites on the Web, with the poorest functionality.

On the surface, boo was a great brand. But branding is about more than looking good. It is about fulfilling promises. The promises boo made – both to its investors and its customers – were ultimately undeliverable. And now boo’s significance is not, as was intended, that of a global brand. Rather, through its negative example, it has helped us to learn the true value of the Internet for branding. It has highlighted the fact that whereas customers may require information and interaction, they want to access these benefits quickly and with minimal hassle.

That boo failed to realize that substance comes before style means that somebody, somewhere is probably still sitting at his or her computer waiting for the site’s homepage to download.

Lessons from

  • Hire the right people. ‘The wrong people were hired – too many fresh faced consultants, too few wrinkled old retailers, and far too many warring factions,’ says the BBC’s Rory Cellan-Jones.
  • Understand the importance of timing. A September launch campaign for a November launch was an inevitable waste of money.
  • Go for cost-effective marketing. Towards the end of boo’s lifespan the company promoted a money-off scheme. ‘By far the most effective means of advertising the scheme turned out to be not expensive online banners or newspaper advertising by emails,’ says boo co-founder Ernst Malmsten. This unsurprising realization came rather too late.
  • Make sure your Web site works. With any Web site, particularly one with an e-commerce facility, it is best to go for a lowest common denominator approach. In other words, make sure it works on every customer’s computer.
  • Appreciate that publicity works both ways. If you put your brand under the media spotlight too early, every mistake you make will be noticed. Remember that publicity is good only when it is justified. Unless you can back it up with a solid brand performance it will turn against you.
  • Don’t run a business with a crystal ball. Running any business can be expensive, but if your sales figures are in the thousands, you probably shouldn’t be spending millions in the hope that sales will improve in the future. Leave overly optimistic and unsupportable predictions to fortunetellers and concentrate on the present reality.
  • Don’t spread yourself too thin. One of the main factors that contributed to boo’s speedy demise was the decision to launch in 18 different countries simultaneously. A similar advertising campaign and identical Web site for each national market may have seemed like a good way to unify a global brand identity, but this costly and misguided strategy has subsequently become the archetypal ‘how not to’ example for businesses seeking to attract global audiences.

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