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e-Tail, Boom Or Bust? 27 June 2000 Edition
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So, over the past few weeks we've seen some very high-profile and well-funded etailers take a thrashing, both here in NZ and overseas and this is causing a lot of people to start asking themselves why things aren't working to plan?

Before I give you my opinions on why so many etailers are having a rough time I feel it important to remind readers that, despite all the bad news, there are a some online retailers who are doing a roaring trade and actually making a (gasp!) profit!

In fact, looking at these "winners" can give a lot of insight into exactly why the others are doing so poorly.

Perhaps most successful, if not in terms of absolute revenues then certainly in terms of customer satisfaction and return on investment, are online vendors such as 4 Cranium Music and 4 Advantage Computers, amongst others.

These two vendors, chosen from a small but growing list of local success stories, have hit on a formula that allows them to actually make money from their online presence.

Before we examine the secrets of online retail success, let's do a postmortem on a recent, and very prominent e-failure:

Boo.com is now dead and buried -- it's rotting hulk only slowly being reincarnated by a new owner -- but what did it do wrong?

In essence, it would appear very much as if Boo.com behaved as if the standard caveats, models and practice of designing, launching and running a business simply no longer existed. They were naive and stupid -- but in the halcyon days of the early dot-com boom, so was everyone else so such shortcomings were simply overlooked.

It certainly wasn't short of startup cash, having received hundreds of millions of dollars in VC funding. The problem was that Boo.com either didn't seek proper advice, or simply ignored it.

First mistake: their website was ridiculously slow and heavily reliant on Macromedia Flash. Only broadband users were able to use it with any degree of success, but the vast majority of users, stuck with dial-up speeds of 28.8K-56K, were left frustrated and disappointed. In short -- Boo.com didn't understand the technology they were using well enough to appreciate its limitations.

To use a bricks and mortar analogy, they built a massive department store but left the entrance up at second-floor level -- so that only the few people capable of scaling the side of the building could actually get in and shop. Admittedly they did respond to these criticisms some months after the site's launch -- but by then it was already too late -- far too many prospective shoppers had already written Boo.com off as not being worth the effort.

Second mistake: Boo.com clearly didn't research their market. They assumed that people would buy fashion clothing from their website simply because it was there. They forgot (as did Bluefly.com and a raft of other online "fashion" stores), that expensive clothing and fashion accessories represent a very personal, intimate, and tactile shopping experience. Much of the enjoyment of the shopping experience when buying such items is the fun of visiting the store and trying on a myriad of different garments before selecting the one that "feels" best. Regardless of the hype, the Net simply can't provide that kind of shopping experience yet.

Of course that doesn't mean that all online clothing stores are a bust, it remains quite reasonable for people to buy every-day garments such as flannel shirts, jockey briefs, socks and casual jeans online -- I can't recall ever having a "shopping experience" while choosing new underwear!

Did Boo.com actually conduct any market research to find this out for themselves? I suspect not. They were simply captivated by the suggestion that the market would catch up to the Net before their funding ran out -- but they had no useful or accurate research to prove this assertion.

Before any vendor even considers creating an online store they must do the research that is fundamental to any business plan. And, as you can see by the growing number of carcasses that now litter the e-commerce superhighway, "because our competitors are doing it" is simply not enough of a reason to build an e-tail site. Do the market research and, if the results indicate that you will be wasting your money, forget about selling online for the time being and smile -- content in the knowledge that those competitors are bleeding red ink because they didn't have the good sense to do their homework.

Boo.com, and many of their peers, thought they could dictate what the market would accept in terms of presentation and service, and they also believed they knew enough to make some wildly inaccurate guesses about market growth without the aid of good research and advice. Quite a recipie for failure don't you think?

This feature has turned out much larger than I'd figured so it will be continued over the next few days. Tomorrow I'll look at what Cranium Music is doing right that Flying Pig, CDNow and others are doing wrong.

INL Is Listening
After my comments in yesterday's column, I did receive an invitation from INL to the launch of their new media supersite. Unfortunately I can't make it with just 3 working hour's notice -- but thanks for the thought anyway guys.

They also expressed interest in finding out why their corporate site crashed one of my browsers. Nice to see.

And, just in case you're looking for this new supersite -- try 4 www.stuff.co.nz.

I see IDG NZ is carrying a story on this new entrant -- but strangely enough, there's no mention of it on the NZ Herald site ;-)

Before I cast a critical eye over the site, why don't you tell me what you think of this latest contender for the crown of NZ's homepage?

As always, your feedback is welcomed.

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