Boo who? After just six months in operation, Boo.com’s board of directors closed up shop in mid-May, placing the on-line fashion retailer into receivership. Having burned through an estimated US$120 million, the company fell into the hands of liquidators and U.K. courts.
The rapid demise of the high-profile retailer sent shock waves through the e-commerce world, as Boo’s fall was seen as a potential harbinger of a broader shakeout. Indeed, Boo isn’t the only scary sign out there.
A recent report by PricewaterhouseCoopers predicted that a majority of U.K. Internet companies could “run out of cash within 15 months.” Even worse, a quarter of them are predicted to dry up within six months, the report stated. The downdraft left European e-commerce executives insisting that Boo’s woes were entirely its own.
“It’s a Boo situation,” said Dinesh Dhamija, CEO of Ebookers.com, a London-based on-line travel service. “They were young people who got into the business with a great plan who couldn’t deliver.”
A year ago, the plan did seem great. With consumer e-commerce just coming into vogue, Boo promised it all. Free shipping and free returns; a site in seven languages and 18 countries; a shopping experience that would let you zoom onto a product, turn it around and see what it looked like on a virtual mannequin; and chic styles that would make shoppers part of the global fashion elite. But after months of glowing press worldwide, Boo’s management, led by CEO Ernst Malmsten and former model Kajsa Leander, received criticism for burning through tens of millions of dollars on publicity before the site even launched.
By the time the site finally appeared in November, debuting in 18 countries, it was almost six months late – and the holiday shopping season was already crowded with competition. To make things worse, the company’s expensive, cutting-edge technology was riddled with numerous technical glitches that kept many would-be shoppers off the site. Those who could get on the site reported that it was more about titillation than function – despite flashy features like 3-D product views and an interactive shopping assistant known as Miss Boo, the site would freeze and crash and was difficult to navigate.
Perhaps its biggest bug: Some shoppers couldn’t complete their purchases. It was an expensive hole that the company could not crawl out of.
The rocky start forced the company to shelve several ventures, including an interactive lifestyle magazine that reflected Boo’s uninhibited and extravagant ambitions, with bureaus in London, New York, Stockholm, Copenhagen and Paris. Then, with sales falling short of expectations, the company fired employees in New York and London in February. With cash growing tight, the company’s backers – including French luxury-goods magnate Bernard Arnault, Goldman Sachs, J.P. Morgan and an investment arm of the Benetton Group – pressured the firm to increase sales before ponying up additional funding.
Searching for last-minute strategies, Boo tried to capitalize on its biggest asset, its ability to deliver products to several European countries within five days, by handling shipments for other companies. The company also was looking for ways to leverage its technology. Neither plan took hold, and soon the company found itself bereft of options.
At a London press conference it was announced that the retailer had relinquished control to KPMG liquidators. The courts would determine which of Boo’s creditors would get paid. It’s a process that could take a week to several months, a KPMG spokesman said. In New York, Boo employees said they were not surprised by the news though there was concern about whether any employees would receive a severance package.
“The company is being very generous,” said one New York employee. “They’re letting us use the faxes, phones and computers for the next week to conduct our job search.”