Development of e-commerce has boomed in the recent years due to the globalization and the advancement of the modern technology. However, not all companies will be survived in this business world with the modern technology. Due to several factors, such as unimpressive and non-persuaded marketing capacity, they normally fail to compete in this business world. There are a few of reasons that lead to the failure of an e-commerce company. The company does not understand the needs, market demands and buying habits of their targeted customers. In turn, they fail to attract customers. Researches have found that around 60-80% of the e-commerce business facing bankruptcy within 5 years of the start up period. There are a number of failure cases of e-commerce business. I would like to share with you one of the top 10 dot-com flops, which is Boo.com.
Boo.com has proved the researchers’ findings for which the e-commerce business would normally result in bankruptcy in the initial 5 years of their existence. Boo.com started it business in the year of 1998 and was placed under receivership on 18 May 2000. Boo.com eventually burned around $160million before its liquidation. It was a United Kingdom Internet company with an intention to sell branded fashion apparel over the internet and it was founded by Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Their vision for Boo.com was to become the world first online global sports retail site and their targeted audience can be characterized as ‘young, well-off and fashion-conscious’ 18-24 year olds. Initially, boo.com was only available in UK, US, German, Swedish with localized versions for France, Spain and Italy added after launch. The boo.com was tailored using the local language of the particular countries and currency and also the local prices. Orders were fulfilled and on-time delivery rates approaching 100%. However, conflicts occurred.
It was difficult to get fashion and sports brands to offer their products through boo.com in the initial stage. Producers had already maintained a well distribution network with the retailers. If the apparel brand allowed boo.com to sell their apparel in the internet with the lower prices, this would create conflict in term of retailers’ interest. Besides that, the phenomena that different selling price in different geographical area existed also. There was no consistency of the selling price in different places that may confuse the consumers. Other than that, poor management and communication between the departments also caused the cost increasing. Besides, a lack of direction and information was given to the staff and contractor. Since then, it caused the employees to stand alone with their own goal. Boo.com also recruited a lot of staff. There was around 350 staff in different countries. It resulted in high payroll cost. Along with the high cost incurred, it consistently reduced the revenue of boo.com.
Another important issue that caused failure in boo.com was the broadband technologies at that time. The boo.com website relied on JavaScript and Flash technology to display the Miss Boo, a sales-assistant-style avatar. It also required several hundred kilobytes to load the home page. Since the broadband technologies at that time were still in the development stage and only 20% of UK households had accessed to the internet but using slow dial-up connections, it took the users long time to load for that site. The boo.com website was also criticized as poorly designed and complicated since the site was to be displayed in a fixed size window that limited the space for the product to be displayed. It is also said that the failure of boo.com was that it built the business across too many countries for which it has exceeded the capabilities of most internet users’ computer.
We can see that those weaknesses in boo.com dealing with its e-commerce business. With the increased competition in the e-commerce industry and globalization, it has totally changed the business trends. There are still a lot of successful e-commerce business, such as Amazon.com and e-bay.com. Their successful is due to its strong organizational and effective team management strategies. Both external and internal factors are really important in determining the successful of e-commerce business. It is not an easy way to establish an e-commerce business nowadays since we can see that there are still a lot more failure cases of e-commerce. Therefore, before having a business online, we need to consider cautiously.
Boo.com has proved the researchers’ findings for which the e-commerce business would normally result in bankruptcy in the initial 5 years of their existence. Boo.com started it business in the year of 1998 and was placed under receivership on 18 May 2000. Boo.com eventually burned around $160million before its liquidation. It was a United Kingdom Internet company with an intention to sell branded fashion apparel over the internet and it was founded by Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Their vision for Boo.com was to become the world first online global sports retail site and their targeted audience can be characterized as ‘young, well-off and fashion-conscious’ 18-24 year olds. Initially, boo.com was only available in UK, US, German, Swedish with localized versions for France, Spain and Italy added after launch. The boo.com was tailored using the local language of the particular countries and currency and also the local prices. Orders were fulfilled and on-time delivery rates approaching 100%. However, conflicts occurred.
It was difficult to get fashion and sports brands to offer their products through boo.com in the initial stage. Producers had already maintained a well distribution network with the retailers. If the apparel brand allowed boo.com to sell their apparel in the internet with the lower prices, this would create conflict in term of retailers’ interest. Besides that, the phenomena that different selling price in different geographical area existed also. There was no consistency of the selling price in different places that may confuse the consumers. Other than that, poor management and communication between the departments also caused the cost increasing. Besides, a lack of direction and information was given to the staff and contractor. Since then, it caused the employees to stand alone with their own goal. Boo.com also recruited a lot of staff. There was around 350 staff in different countries. It resulted in high payroll cost. Along with the high cost incurred, it consistently reduced the revenue of boo.com.
Another important issue that caused failure in boo.com was the broadband technologies at that time. The boo.com website relied on JavaScript and Flash technology to display the Miss Boo, a sales-assistant-style avatar. It also required several hundred kilobytes to load the home page. Since the broadband technologies at that time were still in the development stage and only 20% of UK households had accessed to the internet but using slow dial-up connections, it took the users long time to load for that site. The boo.com website was also criticized as poorly designed and complicated since the site was to be displayed in a fixed size window that limited the space for the product to be displayed. It is also said that the failure of boo.com was that it built the business across too many countries for which it has exceeded the capabilities of most internet users’ computer.
We can see that those weaknesses in boo.com dealing with its e-commerce business. With the increased competition in the e-commerce industry and globalization, it has totally changed the business trends. There are still a lot of successful e-commerce business, such as Amazon.com and e-bay.com. Their successful is due to its strong organizational and effective team management strategies. Both external and internal factors are really important in determining the successful of e-commerce business. It is not an easy way to establish an e-commerce business nowadays since we can see that there are still a lot more failure cases of e-commerce. Therefore, before having a business online, we need to consider cautiously.
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