Example of E-Commerce failure and its causes

An example of the e-commerce failure is Boo.com. Boo.com was a British Internet company founded by Swedes Ernst Malmsten, Kajsa Leander and Patrik Hedelin that famously went bust following the dot-com boom of the late 1990s. After several highly publicized delays, Boo.com launched in the Autumn of 1999 selling branded fashion apparel over the Internet. However, after spending $135 million of venture capital in just 18 months, it was placed into receivership on 18 May 2000 and liquidated.







The causes of the e-commerce failure…

The first reason of failure is Timing. Although there were several months of delays prior to launch and problems with the user experience when boo.com first launched as described below, these had been largely cured by the time the company entered receivership. Indeed sales had grown rapidly and were around $500,000 for the fortnight prior to the site being shut down.
The fundamental problem was that the company was following an extremely aggressive growth plan, launching simultaneously in multiple European countries. This plan was founded on the assumption of the ready availability of venture capital money to see the company through the first few years of trading until sales caught up with operating expenses. Such capital ceased to be available for all practical purposes in the second quarter of 2000 following dramatic falls in the NASDAQ presaging the "dot crash" following the Dot-com bubble. Boo would probably have failed for this reason even if the user experience had been excellent and the launch on schedule. Boo were only the first of numerous similar Dot-com company failures over the subsequent two years.

The second reason of failure is problems with the user experience. The boo.com website was widely criticized as poorly designed for its target audience, going against many usability conventions. The site relied heavily on JavaScript and Flash technology to display pseudo-3D views of wares as well as Miss Boo, a sales-assistant-style avatar. The first publicly released version of the site was fairly hefty—the home page alone was several hundred kilobytes which meant that the vast majority of users had to wait minutes for the site to load (as broadband technologies were still not widely available at that time). The site's front page did contain the warning, "this site is designed for 56K modems and above".
The complicated design required the site to be displayed in a fixed size window, which limited the space available to display product information to the customer. Navigation techniques changed as the customer moved around the site, which appealed to those who were visiting to see the website but frustrated those who simply wanted to buy clothes.
Its interface was also complex with a hierarchical system that required the user to answer four or five different questions before revealing that there were no products in stock in a particular sub-section. The same basic questions then had to be answered again until results were found.