Boo.com opens its virtual doors

Boo.com’s Swedish co-founders Ernst Malmsen, Kajsa Lender and Patrik Hedelin will this month kick off an assault on the transatlantic online fashion retailing market.

Boo.com is located in London’s once fashionable Carnaby Street to take advantage of a pool of IT and marketing talent. But if it emerges as a success then the beneficiaries will be its Scandinavian founder and its North American and continental European backers. For although London-based Boo.com has set a record as Europe’s best-funded European Internet start-up to date, with $125m (&£75.8m) of funding, British effort in the London venture will be rewarded in pay cheques only.

Financing was arranged through JP Morgan, which secured backing from LVMH chairman Bernard Arnault, the Benetton family and Boston-based Bain investment fund.

BMP DDB Needham’s global ad network will handle the simultaneous launch of the Boo.com service in six European counties and North America. Warehouse and dispatch facilities have been established in Louisville, Kentucky and Cologne, Germany, with the aim of achieving overnight despatch of ordered goods to customers.

According to Boo.com chief marketing officer Kajsa Leander: “The e-commerce part is simple, the real problems lie in ensuring that the fulfilment side – the human element – runs smoothly.”

Unlike other “breakthrough” e-commerce categories such as books and CDs, the success of clothing retailing does not lie in a price discounting strategy, insists Leander.

“The buoyancy of the traditional mail order business for clothing is proof of the category’s potential online, and we can deliver far more information and product range than the traditional catalogue,” she says.

“Our marketing thrust is not based on prices,” she adds. “It’s about range and convenience. If a US clothing brand is on the Boo site, it means all that brand’s product line is available, not the limited range you might get at most London fashion shops.”

But online shoppers hoping to pick up a cheap pair of grey import Levi’s will be disappointed.

“Our prices will be the ones agreed with suppliers, adjusted for local sales taxes,” says Leander. “It’s important for our partners not to upset other retailers they are dealing with in the US, Germany, or the UK.”

While Boo.com must tread lightly around its suppliers’ local pricing policies, it will at least match the local retail cost and offer free post and packaging, and a free returns facility, to customers.

But, according to Patrik Hedelin, Boo.com’s chief financial officer, the limited launch of direct online sales operations by fashion brands themselves has left the ground clear to establish a market-leading online fashion hypermarket.

“Gap is the exception in being online, but many fashion brands worry that a direct online base will cannibalise sales and upset an existing retail partnership. Working with Boo.com helps to insulate brands from these problems.”

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