case study boo dot com failure
Boo.com is one of the most interesting cases to study in the dot com boom because of their elaborate development and their catastrophic collapse. Though the company had a well thought out marketing plan and their implementation was revolutionary, they ignored some basic principles that would have made it easier for them to survive in the changing global market.
One of the worst decisions that Boo.com made was trying to go global immediately. As the case study says, “At launch it would open its virtual doors in both Europe and America with a view to ‘Amazoning the sector’” (Case Study 5.3). Though their idea was a big one and it had the potential to change the way business was done on the internet, it had some basic flaws. Admittedly, they wanted to take over the retail sector like Amazon.com was able to take over. They wanted to use that as their blueprint and that is what they sold their original investors on. The only problem with this was that they were not doing the things that Amazon did when they launched. Instead of just starting out small in Europe and gaining market share there, the company tried to do too much. They really got ahead of themselves and they let their global vision blind them to the realities of the situation. Had they been more concentrated on trying to keep their brand name strong in one location before moving to the global scene, they could have potentially had much more success than they did.
In addition to that assumption, Boo.com went into business with the idea that they only had to get a little bit of the market share in their target market. They decided that because there were so many people in their target area, they only had to pick up a small percentage of those in order to be successful. This is a fatally flawed way of marketing, because it means that a company’s marketing message is not suited to fit the entirety of its market. It means that, above all else, they were not going to be able to pick up the market share needed for survival and advancement in the changing global economy.
Another poor assumption that the team made was they assumed that young people were the best market to target. They thought that since young people had money and they knew how to use the internet, they would be prime candidates for purchasing this type of clothing. The problem with this was that, in reality, older people were doing most of the mail-order purchasing. Young people did their shopping at malls and weren’t particularly fond of what was going on in the e-commerce world at that point in time.
Egg.com did things a little bit differently. They went after a market that was not only more equipped to make online purchases, but more apt to. They did not try to pander to the younger generations and they benefited from their patronage to the older individuals who needed the convenience of online shopping in their daily lives.
In terms of product, the company had something good to work with. They were working with some of the finest clothing companies on earth that already had an established following. With this in mind, it is easy to see why they chose some of these brands. A lot of their marketing had already been done for them because of the previous work in branding by companies like Nike and Polo.
Pricing was one of the chief problems with the marketing plan for Boo.com. It really boiled down to a problem with their identity. They were not providing the product at much of a discount to the customer and they were not really saving the customer a lot of time because of the slowness of their website. What exactly were they good for then? Customers saw their products as being overpriced and this led to a lot of discontent within their target market.
When one considers place in terms of the internet, there is a lot to be said. Their site did a good job of branding itself using a simple name that was quite easy to remember. Boo.com was something that people could find and would visit because there was no effort involved there. The problems with online commerce came about as a result of faulty technology. The site was slow, so people got aggravated with having to poke around to find the products they wanted. This could be akin to have a bunch of products stuck back in nooks in a store. If the customer has trouble getting to what he needs, which they did in this case, the company is going to struggle to meet sales figures.
The promotional aspects of the business plan were well thought out, although the business team needed a dose of reality injected into their system. They did a good job of branding and got the word out about their service. What they failed to do in their promotion, however, was get people to purchase their goods. The low conversion rates indicate that they were very successful in getting people to come to the website, but they were not successful in turning those visits into sales when it was all said and done.
Their process was brutally flawed from the beginning. It was not realistic in that they did not anticipate all of the technological glitches and they didn’t anticipate market challenges. They were off schedule by six months on their original launch, which hurt sales and also produced a very negative stigma associated with the site. All in all, they did not have a well thought out business plan, as they were not realistic about their goals and how they would be met.
In terms of people, they were able to bring together a bunch of really smart publishers and some excellent business people. They were able to attract investors who were pleased with the overall makeup of their team. Boo.com did not do well in relating with the public, though. They did not understand what drove people to make purchases and they took a lot of things for granted in their marketing mix.
Boo.com was quite revolutionary in many ways. Though they ultimately failed to meet their objectives, they did do a lot of things that websites are now doing in order to attract and retain customers for their products. One of these things was create an overall welcoming experience for their site. They wanted, above all else, for people to feel as if they were actually shopping in a store. This is something that is very important to people when they purchase a product. Customers think that a part of the price that they are paying is for the service that they receive from the company providing the goods. Many websites do not know how to provide this type of service, but Boo.com most certainly did.
They did this by having a personal assistant help the customer as they shopped. It was a virtual thing that would answer questions and help guide the customer to where they needed to be. Before Boo.com’s “Mrs. Boo”, there was nothing like this to help customers find the products. This is something that has been adopted by many websites now, as they seek to give their customers that overall experience that they crave and demand.
In addition to the personal shopping assistant, the website also gave its visitors a shopping cart to use. This meant that they could pick out products that they wanted to buy and put them in a cart so that they can continue shopping. This is now commonplace in pretty much any online retailer that you find on the net. It is a good thing for both customers and for the website, as the customers get to have the convenience of only having to check out once and the websites have the customers doing more shopping instead of stopping to have to check out. These were really revolutionary things that helped to make the site a success for a little while. Ultimately, they were not able to completely corner their market because of other challenges that they did not anticipate, but there was absolutely nothing wrong with their innovative thinking in the way of helping out the visitors to their site.
Case Study 5.3. Boo-Hoo: Learning from the Largest European Dot-Com Failure.