Less than two weeks after financial woes forced Boo.com to shut down its operations, the online retailer announced Tuesday that it has sold its core technology assets to Internet services company Bright Station.
After Boo.com charged onto the Internet a year ago and then rapidly burned through its $135 million (US$) in financing, Bright Station was able to acquire the company’s technology for just 250,000 pounds (372,500 US$).
“Boo’s technology solution is the result of a massive investment program and is widely acknowledged as a state-of-the-art consumer e-commerce solution. We have been able to purchase it for a fraction of its development cost,” said Andy Dancer, Bright Station’s chief technology officer.
Technology Key Asset
Web site design was a strong suit for Boo.com, which operated sites that allowed customers to zoom in on clothing, spin it in three dimensions and even “try it on” using virtual mannequins.
“Thousands of hours of programming went into developing this technology,” said Bright Station CEO Daniel Wagner. The Bright Station purchase includes Boo.com’s capability to operate in a dozen different languages, as well.
Critics have said that the Boo.com site was too advanced. For many visitors without high-speed Internet connections, the graphics took too long to load, making the site difficult to use and frustrating potential customers.
Bright Station plans to lease Boo.com’s eye-catching Internet design and functionality to e-commerce startups through its subsidiary Sparza, and may hire some of the failed company’s technology experts to support that operation.
The London-based Bright Station said it expects to sign a final contract and receive court approval of the purchase within the next few days. The company, formerly known as Dialog Corp., earlier this month sold its information technology assets to Thomson Corp., in order to concentrate on e-commerce and other Internet businesses.
Boo’s founders had held out slim hopes that the company would be purchased intact after they were forced to bring in liquidators two weeks ago. Calling in KPMG put an end to an expensive, year-long ride that began with a media blitz a full six months before the site was launched.
During that time, Boo.com struck up alliances with CDNow and Yahoo! and saw some of its founding executives depart. Sales grew slowly, and the site largely missed out on the boom in e-commerce seen during the 1999 holiday season.
According to Dr. Therese Torris, an analyst with Forrester Research, Boo.com should serve as a costly lesson to other dot-coms.
“The firm mis-timed and failed to execute on a good idea,” Torris said. “They started by keeping most of their target audience out,” she added, referring to the need for high-speed connections to easily use the site.
Torris said Boo.com also spent too much on advertising and promotions and failed to keep pushing forward on technology innovations. She pointed out that sites such as Landsend.com now feature similar “try on” technology and that third party vendors have begun to develop similar Web sites.
“Web site development should be done in private, not in the public limelight,” said Torris. “By the time they got everything working right, a lot of customers had already fled.”
Ernst Malmsten, who co-founded Boo.com with former model Kajsa Leander, admitted recently that the company burned quickly through its capital. “We have been too visionary,” he said.
Despite the advertising campaign, the company saw revenue of just $680,000 in the fourth quarter ended January 31st. When a promised $30 million emergency loan from majority backer LVMH fell through, the company was forced to fold.
Other backers of the site included affiliates of Benetton Group, as well as investment firms Goldman Sachs and J.P. Morgan.