Unlike the vast majority of the huge dot com disasters Boo.com was founded in the UK. It takes the number 1 position due to its high profile failure – there aren’t many internet-savvy users who haven’t heard of Boo.com. The company’s short lifespan ended in May 2000 after working its way through over £100 million. You can now also purchase the hugely popular story of Boo.com – Boo Hoo.
Tesco have shown that online grocery deliveries can work but Webvan never displayed the business nous to be a success. Raising $375 million, Webvan expanded to 8 US cities, and built a huge infrastructure. However, with extremely thin margins being neglected, unreliable delivery times, and insufficient customers this dot com was always doomed to failure.
The idea was that you could order anything from snacks to movies at any time and have them delivered direct to your door within one hour with no delivery charge. The idea was great but ultimately a little too good to be true. Eventually a $10 minimum charge was introduced but the company still went out of business after working through $280 million in investment.
A flawed idea that no amount of advertising could overcome. Pets.com just never had a unique selling proposition. To make matters worse, Pets.com ended up losing money on the customers that it did recruit as they had to offer free delivery to keep their prices competitive. Nine months after securing $82.5 million in investment the company went bankrupt.
Aiming to be the universal online currency was always a lofty aim, and one that customers never took to. The idea was to minimise transaction costs but people saw no benefits in using Floorz.com for making purchases. The company received $35 million in funding, but ultimately had a floored business model, with PayPal subsequently showing how it should have been done.
Funded to the tune of $65 million and supported by a stream of celebrities that included Michael Jordan, MVP.com was an online sports retailer that never even came close to hitting its projected sales figures. The result was inevitable closure.
Founded by former reality star Neil Forrester, Beenz.com was similar to Floorz.com in that it was a form of online currency. Consumers received beenz for visiting and shopping at online stores. This currency could then be spent at various online merchants or even converted into money and transferred to their credit card account. After running out of money they closed in August 2001.
Only 46 days after its launch party Kibu announced its closure. An online community for teenage girls, they never actually ran out of their $22 million venture capital funding but couldn’t see a future for the company. If only they’d had the foresight to see their potential – MySpace anyone?
The whole advantage of online stores is their minimal fixed costs. Yet trying to sell furniture online results in this one advantage being removed – employees of the company suggested that shipping costs amounted to a half of sales revenue. After spending $76.5 million on marketing the company finally closed – flawed business plans are still flawed when carried out online.
After raising $166 million in May 1999 eToy’s share price fell from a high of $84 to only 9 cents per share in February 2001. In such a competitive industry and unable to benefit from pester power (kids encourage parents to make a high percentage of purchases in the toy industry) this company was destined never to live up to its billing.