This month and March 10th specifically is the 20th anniversary of the start of the Dot Com Crash or at least when the markets peaked and then sharply reversed against investments in dot coms.
One of the Dot Coms that exemplified the crash was Boo.com which failed a few months later in May 2000.
At the time Boo.com was lauded as a disruptive online retailer who would beat High Street fashion brands with innovative interactive site features including 360-degree images. While a good deal of Boo’s demise was down to financial misplanning, the poor performance of the website including the over-hyped interactivity are also judged to have contributed to the collapse. So we spoke to two eCommerce industry experts to understand how it all happened and also to find out what companies are doing to ensure that it will not happen again.
On reflection of the Dot Com Crash, Brad Soo, Product Manager at commercetools comments:
“The crash was facilitated by a combination of poor digital customer experience and companies overpromising and underdelivering. Companies were getting overvalued in the stock market, and the catalyst was Japan entering a recession which caused a domino effect of global stock sell-off that ended with the dot-com crash.
“The crash has taught us many lessons, namely the importance of good customer experience in digital commerce and doing business on the internet. Many e-commerce players operating at the turn of the millennium were pouring tons of money into advertising and promotion to increase their market and mind share.
Conversely, little to no attention was paid to customer experience, and the loss leader strategy did nothing to attract customers who were authentically interested in buying from these businesses. In particular, websites were getting increasingly bloated with content and effects that outscaled the growth of internet speeds available to consumers at the time, leaving them with a miserable experience browsing these websites.
So, two decades since the fall of Boo and others, what can today’s eCommerce businesses learn from the crash on their biggest day and how well prepared are they to avoid their own demise?
“Two decades on from the bubble bursting, organisations, whether they’re B2C retailers or B2B businesses, should be considering the solutions they use (including commerce platforms) based on their digital maturity. The digital maturity of a business is a measure of how ready they are for adopting cutting-edge technology and software, based on their current adoption level of tech in their projects, workflow, and day-to-day operations.
Online retailers should be shopping for solutions at a level proportional to their digital maturity. For instance, a digitally-advanced company that’s adopted modern ways of working and uses the latest tech stacks should consider a modern, headless commerce platform over a legacy suite, which provides retailers’ IT teams with the ability to pivot, make decisions quickly, experiment, test and innovate.”
So the help contextualise this in today’s digital world, a Forrester study set the cost of an outage at $5,000 per minute — even before accounting for the impact of reduced CX and loyalty. At this rate, an unresolved incident lasting an hour could cost $300,000 or more to a company.
Mike Riley, senior director – UK & Northern Europe, New Relic paints a positive picture but with some words of caution to eCommerce companies in current operation:
“Today’s online retailers have more than learnt the need to be totally customer-centric and guard against poor customer digital customer experiences that brought down Boo two decades ago. The current focus on application and infrastructure modernisation is driven by the need to scale more quickly and easily to surges in customer demand while sustaining the highest possible levels of availability, reliability, and responsiveness.
But ironically the migration to modern software stacks and cloud architectures including microservices and Kubernetes brings a complexity that can get in the way of delivering competitive customer experiences.
Research by New Relic revealed more than one in two IT teams say their new software and infrastructure is harder to manage and monitor. So perhaps it’s no surprise that almost half admit customers find out about problems with their sites and apps before they do.
Certainly, today’s eCommerce leaders are far more robust and serious than Boo was. But as they forge ahead with their new technology strategies, the need for end-to-end observability increases and will help avoid any repetition of the problems that contributed to the Dot Com bust.”