European E-Tailer Boo.com Goes Out with a Whimper

The saga of failed European e-tailer Boo.com reached an anticlimactic conclusion Thursday when the site sold its brand and domain name to Fashionmall.com , an online seller of fashion and beauty items, for an undisclosed sum. Earlier this week, Boo sold its cutting-edge technology to British firm Bright Station Plc  for $375,000--a pittance compared with the estimated $35 million it took to develop that technology.

Among the many signs of difficulties facing online retailers, few have been more prominent than the rapid collapse of Boo.com, which sold high-end sportswear and related items. Over the past year, the company received investments of more than $100 million from some big names in the fashion and luxury-goods industries, including Italy's Benetton family, the chairman of luxury-goods maker Louis Vuitton , and several wealthy Middle Eastern families.

A lot of that money went to hire programmers and technicians, who tried to develop a cutting-edge site where customers could view items in three dimensions and orders could be rapidly processed in a variety of currencies. The problem was that only customers with high-speed Internet connections and the latest browser software could take full advantage of the site, and everybody else was left frustrated with slow-loading pages. The site went live in late 1999 after several delays, but shut down less than six months later because of mounting losses.

The Boo.com debacle does hold some lessons for other online retailers. For one thing, pumping a lot of money into cool technology won't pay off unless people actually want and need that technology. Customers sitting at home buying sportswear over the Web don't need a turbocharged site; they just want to find what they want and buy it. Boo also got tons of publicity before it even opened for business--always a risky strategy, since it raises expectations high and puts a company under a spotlight just when it needs time to learn from its mistakes.

Since Boo's demise, Disney's (DIS) Toysmart.com and Viacom's  Red Rocket--both online toy retailers--have gone belly up. Other online retailers will certainly fail in the coming months and years as the industry consolidates, but few are likely to flame out as spectacularly as Boo.com. If Boo's excesses cause some e-tailers to pull in the reins on spending, then its high-profile collapse could have a silver lining.