Boo.com was another famous victim of the dot-com bubble era, but one that gained far more notoriety than most of its contemporaries. The company was set up in 1998 with a view to selling branded fashion apparel on an online store. Despite splurging $135M worth of funding in just eighteen months, the site went through a rapid liquidation in an almighty collapse in 2000. So what went wrong, and what was the full story behind it? In this article, we take a look at these questions and more.
The company was founded in London in 1998 by Swedish trio Ernst Malmsten, Patrik Hedelin and Kajsa Leander. The trio had set up the successful Bokus.com – an online bookstore. At the time Boo.com was founded, Bokus was one of the internet’s most popular bookstores. It took until 1999 for Boo.com to be launched, with the aim of harnessing the internet’s power and reach to sell branded fashion apparel. Their plan was to become the largest sports retailer in the world – with the vision of conquering both the US and European market.
Boo.com had gained significant funding from venture capitalists – who were convinced the founding trio’s positive track record would result in success. But these lofty expectations were never met. Boo.com struggled with delays in finishing their website, and when it was complete, issues with user experience. The site was reliant on an inefficient code format, taking it minutes to load. Boo.com was well behind the state of other websites at the time.
One of the key reasons for its failure was its huge focus on trying to build a global brand from the get-go. By the time their website was ready, Boo.com already had 400 employees spread across eight offices in expensive locations like Amsterdam, New York City and Paris. Their headquarters were in the exclusive Carnaby Street in London. Having so many staff members and being in so many different locations was all part of their rapid growth formula. Instead of launching on a country-by-country basis, Boo.com tried to launch simultaneously throughout Europe.
Boo.com attracted investment of around $135m. Yet the majority of this was spent on plush offices, as well as an extremely aggressive advertising campaign. In later years, a Boo.com manager acknowledged that the company had overspent on marketing, while under-spending on technology. In just six months, the company spent over $100m on advertising. Perhaps the worst part was that Boo.com’s website wasn’t actually ready at the time of their advertising campaign. Moreover, the company offered free returns to their customers, with the rate of returns higher than expected, all of which cost Boo.com.
There were countless reasons for the collapse of Boo.com. Ultimately, the site tried to grow too quickly. They engaged in a wild advertising campaign, even though their website wasn’t ready. Under-spending on technology too was key, resulting in a poor user experience. There was very little in the way of factors that could lead to anything but failure. When the company was eventually liquidated, just $2M was earned through its assets. The website ceased operations, never to be seen again. As of September 2019, the domain name redirects to hostelworld.com.