Boo.com's Bold Fashion Statement

Baldwin Louie — Mon, 10 May 1999 18:00:00 -0400

It is that rarest of treasures - a warm, cloudless day in England and a bank holiday to boot. By all expectations, few Londoners should be at work. In the offices of Boo.com, however, there's always work to be done, and dozens of staffers are testing the servers for next week's launch, putting the final touches on the op-art site design, setting up a temporary desk for the company's CFO. As if the sunny holiday weren't distraction enough, there's the drilling, the torn-up floors and the desks that keep rolling around to elude the nonstop construction.

And there's the music: a loud heavy-metal soundtrack that pours through open windows from Carnaby Street, still a tourist magnet for young clothing mavens and scene-seekers. Mod and hippie styles drove the first incarnation of Carnaby Street, but the Internet is driving Boo.com's attempted renaissance. It hardly matters that no one here is old enough to remember the '60s heyday of Carnaby Street. All they need is the Austin Powers send-up to know that Boo.com had better be groovy, baby. And the goal appears to be just that - to make Boo.com hipper and more exciting than the sporty clothes it peddles.

Coordinating all this chaos are two 28-year-old Swedes who are not afraid to admit that they don't know much about the Internet. True, they founded an Internet company, but they sold it in less than a year. (They didn't even have a balance sheet to show the acquiring company.) Spend any time with the duo and you quickly learn that they're just as excited by earlier accomplishments. Chief marketing officer Kajsa Leander looks fondly back on her days modeling for the Elite agency and running a small Swedish publishing house; CEO Ernst Malmsten seems proudest of the Nordic Poetry Festival the pair organized in New York City in 1993.

Make no mistake, however: This is a deadly serious e-commerce company. It has assembled an impressive group of financial backers led by J.P. Morgan, the venerated investment bank that had never put money into an e-commerce startup company until Boo.com. In its most recent round, it added a multimillion-dollar investment from Bain Capital (dossier) in Boston. Boo.com is sinking tens of millions of dollars into building and supplying its site, and will back it up with generous ad and marketing campaigns launched over the next several months. Some of the biggest names in fashion, from Louis Vuitton to Benetton, are backing the venture. And Boo has secured online sales authorizations from big names like Fred Perry, Donna Karan and the North Face. It has hired staff with stunning pedigrees from companies as varied as Barneys (dossier), Virgin and the Boston Consulting Group. As the buzz envelops the project, the Boo.com Web site is getting some 60,000 hits a day - even though there's really nothing on it.

What makes boo.com so compelling? After all, it is entering a space - retail apparel - that has so far stubbornly resisted the Web. Luke Alvarez, Boo's global business-development director, says the group will have a "killer Web site" on top of a "global business model," which will lead to "first-mover advantage."

Of course, everybody says that.

But hear Boo out. Its goal, as Leander says, is to build a place where "you can use the Internet to fulfill your fantasies." That's assuming that your fantasy involves buying casual and athletic apparel. Boo.com's design will resemble the ultimate catalog: Clothes rotate so you can see what a jacket looks like from the back; there are virtual mannequins you can paste the clothes on; you can search by brand, by type of clothing or even by activity, such as basketball or rock-climbing.

Then there's distribution. At a time when customers are beginning to question the shipping charges at places like Amazon.com (AMZN), Boo.com says it will ship anywhere in North America and Europe free. It will guarantee five-day delivery, working with a series of partners including UPS and Deutschepost. Perhaps most remarkably, Malmsten claims that the site "will have real-time links to our suppliers," so that nothing will be available for purchase on Boo.com that doesn't physically exist in a warehouse somewhere.

Finally, there's globalization. Boo.com represents one of the first retailing sites created from scratch that will operate "globally from day one," says Jay Herratti, Boo's VP of U.S. operations. New York has the customer-service and front-end technical issues; London, design and management. The virtual mannequins and shoe stands were shot in Los Angeles. When the site becomes operational later this month, it will launch simultaneously in four major markets and six languages. Entrants into Boo.com's space can choose from 35 different countries, and that number is bound to expand during the next few months. All transactions can be done in local currencies - not just U.S. dollars, which is a major hurdle for American sites trying to go worldwide.

And what about that name? what does it mean? It is, Boo.com staffers say, one of the world's most popular names for cats; the phrase "miss boo" is sometimes used to describe a little girl; and in Amsterdam, "boo" is decades-old slang for marijuana. The word's vagueness is part of its appeal. "Boo," says one staffer with a Zen turn, "means nothing in 50 languages."

For the company's purposes, boo is also the name of what might turn out to be the site's secret weapon: Miss Boo, a 3-D shopping bot who can assist shoppers with everything from product questions to sizing. Miss Boo is something of an obsession for Leander, who jokes about the character's loose past: "She was in the Betty Ford clinic for a while, and she really likes guys." A chic stylist was brought in to consult on the bot's proper hair length, and a writer has been commissioned to create Miss Boo's history.

When Miss Boo becomes fully operational - probably some time this summer - she will enhance the site's product descriptions, sort of a sassy version of the mini-rhapsodies in the L.L. Bean (dossier) or J. Peterman catalogs. When a shopper brings up an enhanced, low-cut version of the Converse (CVEO) All-Star sneaker, for example, Miss Boo will say: "I'm definitely not a lady who lunches or a woman with a wardrobe the size of a house, but there's something about these classic pumps that brings out the Imelda Marcos in me. Give me a pair in every colour." She will also pop up as an avatar on other Web sites.

She can sound overreaching and a little corny - and if potential customers are turned off by Miss Boo, the entire project could be in jeopardy. By the same token, Miss Boo is part of a sophisticated, multilevel strategy that may well marry Web-community power with the social pressures peculiar to fashion success. Later in the year, Boo.com plans to introduce a line of seven "archetype" characters that make up Miss Boo's posse of friends. The precise outlines are still being decided, but the characters will be an internationally diverse amalgamation of the 30-plus "style tribes" that Boo's market-research team has identified.

"I want people to be able to see Miss Boo's friends evolve," says Alvarez, who has a Cambridge degree in the philosophy of language. "I want them to be obsessive, like Jennicam."

It is all rather like plotting an elaborate novel, and what else would you expect from a founder who ran a publishing company? Perhaps Boo.com's pinnacle is a magazine, called Boom. Although the company insists that the two entities are independent, each of Boo.com's offices will have an editorial staff. Hugh Garvey, an aspiring novelist, heads Boom's New York office. In a recent interview, Garvey wore a sleek, broadstriped blue suit, a far cry from the scruffy garb he favored not long ago as assistant literary editor for the Village Voice. Garvey says he wants the magazine to be "an interactive playground for your mind." The stories will be graphically rich, and, as with fashion magazines, there will be plenty of information on how to obtain the stylin' clothes the subjects are wearing. The difference is that here you'll be able to click on them and buy them. Boom will be updated regularly, but each issue will have special themes, such as "a new way of looking at the body." One story assigned for the dummy issue, for example, was a tongue-in-cheek comparison of the respective workouts provided by action sports (like kickboxing) and their videogame analogs.

Linking it all is a funny, indirect and slightly shocking ad campaign designed by DDB Needham. The ads' running theme plays off the unlikely synergy between the Net and the clothing retail business: A series of computer geeks are depicted in the midst of athletic feats that are painfully unsuccessful, even though they appear to have acquired the finest sporting gear. One is capping off a tough jog by vomiting into a garbage can; another is carried away by an ambulance after biking into a fire hydrant; another is shown falling off an outdoor stairway rail following a botched skateboard maneuver. The more-elaborate broadcast version, which will air in several of the largest advertising markets, was directed by Francis Ford Coppola's son. Remember: This is the fashion biz.

What levels of investment do Boo and Boom represent? Boo.com officials are skittish about discussing finances, but two sources from its banking circle say the company is spending "tens of millions" of dollars. Indeed, Boo's real-estate and salary expenditures are easily seven figures apiece. One apparel company with which Boo.com has a partnership told a fashion-trade magazine that the Web site's initial order was for just under $500,000 worth of merchandise; multiply that by the site's roughly 20 such partnerships and pretty soon you're talking about real money.

The company barely bothers to hide its intention to go public, most likely this fall. What are their chances of success? There are very few precedents. Until recently, apparel retailers have been reluctant to push online sales, for various reasons: They don't want to alienate brick-and-mortar retailers and are afraid of losing their brand identities in the muddy sea of "grey market" sales. Boo.com has managed to convince 20 important brands to abandon those fears.

How did it do it? For one thing, Boo.com is adamant about not being a "discount" site. The stand is meant to reassure apparel retailers that Web consumers won't think their products are cheesy. It's also a central factor of Boo.com's business model, since the company is counting on gross profit margins in some sectors being as high as 100 percent.

Of course, the lack of exclusivity means that the brands could start their own Web operations, or make comparable arrangements with other sites. But Boo.com executives insist they're not afraid. "Ralph Lauren operates his own flagship stores, and he sells his clothes in other stores. There isn't a problem," observes Charlotte Neser, who manages Boo's partnership relationships. She and her colleagues believe that consumers want to mix clothing styles from a wide menu, which limits the threat posed by a single-brand site.

As for other web retailers' sites, the founders' attitude is: Bring 'em on. They are confident, even cocky, that no one is about to reproduce the punishing personal travel schedules they have logged over the last year to sew up the bonds with clothing brands. (CFO Hanlan recalls that in a single recent 24-hour period he was in six airports.)

"I really don't think anyone is going to be able to make all the personal connections we've made over the last year," says Leander matter-of-factly. And Malmsten put it more bluntly: "Who is going to be our competition? Who's going to come into this business at the same level we are already at?" At that point, you couldn't say boo.

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Boo.com's Bold Fashion Statement