An example of an E-commerce failure and its causes

There are extremely successful virtual e-commerce companies such as eBay, Google, or Yahoo! in recent years. However, there are large numbers of e-commerce companies that are not able to maintain their profit through e-commerce. Some well-known business-to-consumers (B2C) failures include eToys, Xpeditor, Chemdex.com, Boo.com and Webvan.com. Now, I would like to explain why Boo.com fails in its business.

Boo.com was established in 1998 and was founded by three Swedish entrepreneurs: Ernst Malmsten, Kajsa Leander, and Pattrik Hedelin. Boo.com intention was to sell branded fashion apparel over the internet. The website provided customers with a shopping assistant “Miss. Boo”. However, Miss. Boo failed to assist customers with the purchasing experience. Boo.com essentially failed because they did not carefully plan their business by considering the 4 P’s (Price, Product, Place, and Promotion) and the environmental factors (Social, Technological, Economic, Political, and Geography) that might impact their overall success.

Boo.com failed because they tried to do too much without careful planning. For example, Boo.com established many online shops in many countries without considering the internet capability of the low developed countries. At that time, about 20% of home users used dial-up internet which did not allow them to access Boo.com at a fast rate. Boo.com believes that their business would have succeeded if the internet revolution would have occurred faster, it was just bad timing for Boo.com.

Causes of why Boo.com Fails

· Speed

It is very slow to load pages because Boo.com relied heavily on JavaScript and flash technology. Besides, at that time many people used dial up internet.

· Poor web design and usability

It is difficult to get where visitor want to go. They had a policy of “limiting the amount of transaction they made to three per twenty minute” which will discourage customer to shop at Boo.com again.

· Usage of capital

They did not manage their capital effectively. They spend 125 million in just 6 month to market itself globally but had issues with different language, prices, and tax. Besides, the company decides to pay postage on return items from customers.

Steps to avoid failures

1. Build long-term relationship with customers

· Getting comfortable and assuming that a business relationship, because it has existed for years, will continue to exist. Long-term business relationships are a thing of the past in the electronic world, and the ability to see everyone’s wares at once makes us fickle

2. Design website with simplicity and great usability

· A successful e-commerce website must be fast, easy to use, convenient and perhaps fun.

3. Don’t focus too much on E-Commerce. Customer still needs face-to-face interactions.

· Customers still need personal attention; this is why successful e-businesses have multiple channels of communication, not just the Web. The whole concept of e-commerce is so electronic; there is a natural tendency to overlook the actual human customer at the other end of the transaction.

4. Manage capitals more effectively

5. Have an effective plans and always consider the environmental factors and the 4 P’s