From the Archive: Boo.com

‘From the Archive’ is the regular column that revisits some of the more interesting retail stories covered over the past 30 years by Glynn Davis for a variety of publications.

This period covers many seismic structural changes in the industry including the emergence of the internet. Alongside the actual stories, Glynn will be adding commentary around each of the pieces that will seek to put the articles into context with today’s landscape.

From Sunday Business (16 September 2001)

Many of the technological advances achieved by the online fashion retailers over the past 20-plus years has invariably been a copy of what the short-lived web business Boo.com sought to create back in 1999 before it went bust in spectacular fashion after a matter of only months.

My article in 2001 told the story of this pioneering but fatally flawed organisation. Boo.com started trading with an incredible array of online capabilities including virtual reality advisors, a presence in 20 countries with transactions undertaken in all 20 currencies, websites operating in seven languages, international fulfilment, and rotating virtual models on which customers could zoom into the detail of the imagery.

The only problem was that it was simply way ahead of its time and the technology of the day – dial-up connectivity at slow download speeds – could not support the ambitions of its co-founders Ernst Malmsten and Kajsa Leander. Their vision was ultimately, sadly thwarted. But before the downfall, what a wild and eventful ride it was for the pair of them.

They lived the highlife with frequent travel to New York on Concorde, lavish parties and profligate spending such as installing a £40,000 air-con unit in its Carnaby Street office that was never switched on because nobody had sought planning permission. They also issued mobile phones to all employees in the very early days of the devices rather than using much cheaper landlines.

At least they had the necessary pile of money to spend because their ambitious vision went down well with investors in those heady early days of the internet. Boo.com attracted serious investment of $120 million that gave the start up at valuation of $500 million. These were not mug investors either – including the likes of Bernard Arnault of LVMH, the Benetton family, Goldman Sachs, JP Morgan and Bain Capital.

It very quickly became apparent that cobbling together the various software solutions to achieve their aims was going to be a tough challenge. One solution to the problem was to recruit more and more people but this led to a complete loss of control over who had responsibility for this growing workforce.

The 100 customer service advisors who had been brought on-board spent their first eight months doing very little as the tech team tried to get the complex web of cutting edge technologies to work together. After various delays the site finally went live on 4 November 1999 and immediately crashed. To download the site’s sophisticated graphics took 10 minutes on a 56k modem, which was the level of tech in widespread use at the time. And that was just to get the homepage loaded.

The predicted 1,000 orders per day was missed by some way as it was receiving around only 200. This led to the perennial fashion industry issue of dealing with surplus stock. With cash flowing out the door from the company’s massive overheads and disappointing order levels Boo.com was forced to reduce its headcount.

With issues continuing to mount and its cash position falling rapidly the likelihood of an IPO for what had become the poster child for online retail was deteriorating rapidly. By May 2000 the writing was on the wall and after one final party at the Midas Touch pub in London’s Soho the plug was pulled and the lights went out for Boo.com. The star had shone brightly for less than two years in total (including merely months of actual trading).

The last time I saw Malmsten was on 1 November 2001 at Home House for the launch of his autobiography interestingly titled Boohoo.com. I got him to inscribe my copy with the wording: ‘It was all going well until somebody said Boo and then it all went wrong.’ It reads as a cautionary tale but despite its myriad issues with poor management Boo.com included some incredibly forward-thinking aspects that are today part of mainstream online fashion retailing.