The collapse of online sportswear retailer Boo.com is a parable of our times. I don’t mean simply that it’s symptomatic of the deflation of the Internet stock market bubble – that is taken as read. What I’m referring to is the way in which its founders have greeted their newly-straitened circumstances.
After Martha Lane Fox’s ill-judged comments about Lastminute.com’s over-hyped performance, we now have the ritual babbling of Boo.com’s Swedish co-founder and former model Kajsa Leander. She is quoted as saying that she wants to “chill out”, adding that she’s been “working so hard for two years and never taken a holiday”.
Well, excuse me Leander but starting a business and being an entrepreneur has traditionally meant foregoing holidays for the first couple of years or so. Or didn’t the institutions from which you raised about &£85m in a series of increasingly desperate financings explain that to you?
Asked how she could have possibly hosed so much moolah away, she replies: “Well, when you hire a lot of people, you need a lot of office furniture” – and, it is widely noted by analysts in the sector, a lot of Concorde flights and five-star hotels. Such breathtaking arrogance about other people’s money can inspire little sympathy. It’s probably just as well this company went down the pan as swiftly as it did. I’m only disappointed not to have seen the headline: “Leander and the Swanee”.
Her psychologically-teenage co-founding partner, Ernst Malmsten, is no better. He solemnly informs us: “Maybe this is the end of people building a business from scratch themselves.” Er, no, but it may be the end of people building a business based on hype and then believing the worst aspect of losing millions of pounds is that they haven’t had a holiday.
You could rail endlessly at what these spoilt Swedish brats represent, but that’s not very constructive. The important issue they highlight is that dot-coms aren’t worth a light unless there is a substantial, commercial proposition at their core.
As said here last month, e-tailers which return for a second round of financing in the second half of this year could expect a tough time from newly-hardened incubator funds, many of which are little more than turbo-charged venture capitalists looking to turn a fast buck. I concluded that only those – such as Wal-Mart – with critical mass, global reach and, most vitally, depth of knowledge and experience in the retail industries would prosper.
This view is reinforced by a survey published this week by Shelley Taylor & Associates for the Internet World 2000 event in London that shows how dire online retailing offerings in the UK really are. Consumers questioned about 100 websites on both sides of the Atlantic placed four UK sites in the bottom five. They were JJB Sports, Waitrose, Elonex and Simply Computers.
According to Shelley Taylor, e-tailers should – and here’s a radical thought – offer the same standard of service as traditional stores. She was reported in The Times on Monday as saying: “Contrary to media hype, Web commerce represents a selling evolution rather than a revolution. The Web is simply a new technology that can be used to facilitate an age-old process.”
As Angus Deayton tellingly says in the new round of rather good Barclaycard television commercials, the Net provides a service that is “rather like a shop, really”. At least, it does when it’s any good. The mistake of Boo.com and company was to believe that there’s something intrinsically marvellous about the technology.
Boo.com bloated itself into a global operation or, more accurately, a mis-operation. It is to the discredit of its backers, such as Goldman Sachs and JP Morgan, that they were taken in by “globality without substance”. If this can happen at a global level, then Shelley Taylor’s survey shows us that the UK is particularly vulnerable to this market weakness.
Such a view was confirmed this week by another research exercise – computing consultancy CMG – that demonstrates the UK has lost its leadership in European e-commerce to France, amid signals that shopping growth predictions have been too optimistic. Among the 250 companies polled, revenue from Net trading was down 30 per cent on June last year.
Why is it that – to use a cliché – this nation of shopkeepers is proving so dire at e-tailing? I think the answer is to be found in one particular aspect of the British disease. We are bad at content. We have good retail industries, but we are woeful at online content.
Since I’m on about parables for our time, here’s another one. The Millennium Dome at Greenwich is looking for a further &£30m – to add to the &£509m it has already wasted – to stave off bankruptcy. The fault of the Dome is not in its concept, but in its content. A patronising Millennium Commission and Government believed that what the British public wants is a neo-Seventies sub-museum and fun-fair pap. The success of Tate Modern, by contrast, proves otherwise.
Content is king, whether we’re downloading entertainment or information from the Net or taking the children on a day out. The error of thinking otherwise can be made anywhere in the world, as Boo.com demonstrates. But the UK is particularly prone to making that mistake. So long as it does so, youngsters who need their bottoms smacked, such as those at Boo.com, will continue to fritter away our investments.
George Pitcher is a partner at issue management consultancy Luther Pendragon