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Fashionmall.com CEO Ben Narasin isn't crazy. Yet many people questioned his sanity on June 1, when the head of the New York-based apparel and accessories portal bought the haggard remains of Europe's big E-commerce failure, Boo.com. Since its collapse on May 18, the British clothier -- which blew through an estimated $200 million before coming to a screeching halt less than six months after its launch -- has become the laughingstock of online retail.
That didn't deter Narasin. He sees plenty of potential in adding Boo's brand name, Internet addresses, trademarks, and content to his six-year-old company's harem of fashion sites. "Boo is a cutting-edge, globally recognized brand," Narasin says from his hotel room in London, where he has been putting the finishing touches on the deal. "I never said I believed in the business model or the way the company was run, but the brand is not tarnished."
Indeed, Narasin says the new, improved Boo.com, slated for relaunch at the end of June, will remain a stand-alone site but will no longer sell anything. Instead, he plans to transform it into a "global fashion lifestyle portal" as part of his master plan for international expansion.
PRICEY MISS BOO.
British Net services company BrightStation, which on May 30 bought Boo's technology, says it paid only about $375,000 for its part of the deal. Narasin will only hint at how much more he paid for the company's remaining assets, which include the nascent print magazine Boom and animated Web mascot Miss Boo, but it probably wasn't all that much. "It was more than what was paid for the [technology] and worth significantly more, too," Narasin says.
One of Boo.com's main assets is the groundwork it laid when it registered its domain name in at least a dozen European countries and secured hundreds of trademarks. Narasin also inherits content created in several languages. He figures that these moves alone will shave 6 to 12 months off the time it would take him to expand outside the U.S. "This was a company that was built from the ground up to be global, but [the founders] designed things they couldn't use in a retail business," Narasin says. For example, the old site's sophisticated, 3D technology was too cumbersome to load without a high-speed Net connection. "The new site will take a low-bandwidth approach," Narasin says.
Still, the decision to eliminate the retail aspect of the site could destroy the brand's main cachet: unique access to trendy fashion. For all its faults, Boo.com made its name by introducing edgy, little-known brands from around the world and regularly offering products customers couldn't find elsewhere on the Web or in stores. U.S.-based shoppers were able to buy apparel only sold in Japan, for example. "What Boo really brought to the table was its supplier relationships," says Ken Cassar, senior retail analyst at Jupiter Communications. But he cautions: "Repositioning it as an aggregator is going to further confuse its already baffled customers."
BUILDING TRUST.
Boo also took on the task of warehousing and shipping inventory, as well as handling returns and customer gripes -- costly but necessary responsibilities for a company trying to establish expensive but largely unrecognized brands. "Most people aren't willing to take risks online with brands and companies they don't know, especially with apparel, unless they know they can return purchases and get their money back," says trend analyst Irma Zandl of Zandl Group.
In its new form, Zandl says, Boo's greatest challenge will be establishing the same level of trust as before, since it will only point shoppers in the right direction and no longer handle transactions or customer service. It's also more limited since it will focus just on already existing fashion e-commerce sites. And among those, it will feature only the ones that deliver their products internationally.
Still, Narasin says he'll have no problem finding an adequate number of sites hungry for the exposure that fit Boo's elite lifestyle profile. The Italian Trade Commission has already given him a database of 400 Italian fashion designers' Web sites, although he has yet to find out how many of them sell products. Plus, he has a slew of ideas for taking advantage of the editorial opportunities that come with a niche portal, such as identifying leisure and lifestyle trends in various cities and recommending style advice. He also plans cross-promotions between the Boo.com and Fashionmall.com sites.
WHO NEEDS MALLS?
Plus, as part of the deal he's getting access to Boo's database of 350,000 to 400,000 names and e-mail addresses. However, he says strict European privacy laws restrict his use of the information to customers who have given "absolute and explicit consent."
In any case, it's far from proven that online shopping malls will work. Online shoppers tend to go directly to retailers' sites. "There's not the same incentive to go to an online mall as there is for one in the physical world," Cassar says. Adds says Cameron Meierhofer, an Internet analyst with PC Data: "I'm skeptical about their ability to gain traction when the whole concept of the mall is doomed since it means competing with AOL or Yahoo!"
Fashionmall also has yet to turn the corner financially. It derives its revenues from advertising sales, sponsorships, placement fees, and by generating leads for member stores. But though its members include such prestigious names as Coach, Banana Republic, and Gap, Fashionmall lost $2.8 million on revenues of $1.3 million in the first quarter of this year. The company's shares, which started trading publicly in June, 1999, are trading at about $2 1/2, well below the 52-week high of $12 1/4. And in April, even the severely ailing Boo.com generated more traffic than Fashionmall.com, attracting 700,000 unique visitors compared to Fashionmall's 589,000, according to PC Data.
Market followers such as Tom Julian, a trend analyst for marketing firm Fallon, have their doubts about Narasin's chances of success. "Boo used to be hip and eclectic," he says. But now no one wants to be a Boo.com. People just think of it as a very expensive mistake to learn from." Ben Narasin realizes that. And he's convinced that the lesson is even a spectacular flameout can present opportunities for a saavy entrepreneur.
Copyright 2000 , by The McGraw-Hill Companies Inc. All rights reserved.
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