Specialty online designer-wear retailer boo.com, which carries footwear from DC, Reef, and Vans, as well as apparel from Stussy and Freshjive, collapsed last Thursday through lack of funds.
The announcement coincides with a similar phenomena occurring around the business world — dot-com layoffs.
Boo.com, which had just launched its Web site six months ago, appealed unsuccessfully to investors for a 30-million dollar cash lifeline. The company now owes some 25-million dollars to creditors, most of them advertising agencies, Reuters reports.
“They had a lot of chiefs but no Indians,” says Freshjive National Sales Manager Jan Sussman, referring to boo.com’s strong concept yet poor execution. Sussman says he could not comment on Freshjive’s investment in boo.com, but he said that the bankruptcy was a disappointment.
Despite reporting growing revenues — April net revenues reached 500,000 dollars — boo.com still spent far more than it was bringing in, forcing the Internet start-up to seek more capital.
Dr. Therese Torris of Forrester Research speculates that boo.com’s failure was a result of burning too much money on advertising and public relations — in just a few months the company had forked out nearly 25-million dollars in TV, radio, and print advertising, Dr. Torris states.
Boo.com isn’t the only Internet company experiencing financial problems. In San Diego County alone, a number of Internet startups such as CollegeClub.com and Encinitas-based SpinRecords.com are laying off employees because the once seemingly endless cash flow experienced during the Internet boom has screeched to a halt.
The Union-Tribune reports that SpinRecords.com laid off 40 employees over the last two weeks, and that CollegeClub.com, which jacked its work force from 55 last June to 257 by the end of February, has also started to down size.
Peter Shaw, a management consultant, told the U-T last Friday, “It’s a return to reality. The concept of unlimited cash no longer exists, and people taking a closer look at the long-term business model.”