Strong Growth

France had been a leader in terms of establishing an information society but was starting to get trapped by its legacy Minitel tool. The Minitel was introduced in France in the late 70s as essentially a precursor to the web. The service allowed users to read online versions of magazines and newspapers, shop in online catalogs, chat, play games, and have access to every government office. In the early 80s, Minitel penetration became so high that the government-owned phone company decided to drop printing of phone books and move that service to the Minitel.

Fast forward to the late 90s. France is still on the Minitel and the Internet has gotten wide acceptance in the United States. At that point, Internet penetration in France is sluggish as few people see any value in it. As a result, the French government issued an ambitious plan to move France onto the Internet. As is the case for every major government project, little happened for several years.

However, the combination of government support for a new Internet initiative and the rise of global services finally started a revolution in French online services. According to several people I talked to in Paris and in the south of France, the effects of the Internet were not really felt until about a year ago, when a sudden usage explosion started. From 1999 to 2001, the number of Internet users in France tripled and it is expected to double this year to about 30 million. As more and more services are now moving away from the Minitel and onto the Internet (as I was told by an American living in France, the Minitel is now fairly useless as most everything has moved onto the Internet.)

Combined with growth in other European countries, this represents a market of almost 150 million users in Europe.

Broadband

While most Internet users in Europe still use narrowband, a few people are starting to make the move to broadband. However, prohibitive costs for DSL mean that most broadband users in France are accessing the net via cable. A DSL line can cost over 100 euros whereas a cable modem connection can be had for as little as 15 euros, with averages of 30–45 euros per months for a 500Kbps connection. The big advantage of such connections in Europe is that local phone is metered whereas broadband is not. As a result, heavy Internet users are finding that it is less expensive to get a broadband cable connection than it is to use a modem and phone line.

The Euro

For the first time in history, 12 countries have simultaneously gotten rid of their currencies and moved to create a single monetary block: the Euro is here and it has wide implications on global E-commerce.

No more Austrian schillings, Belgian, Luxembourg or French francs, Finnish markka, German Marks, Greek drachma, Irish punts, Italian lira, Dutch guilders, Portuguese escudos, or Spanish pesetas. No more complexity in trying to convert those from one to the other when doing electronic transactions. Now, the Euro is the currency for this whole zone (dubbed the Eurozone) and it represents a very large market, larger, in fact, than the American market in terms of customers.

One the biggest challenges in dealing with the European market was the lack of standardization when it comes to laws, shipping, currency, and language. With the Euro, a large portion of that problem can be taken care of as members of the Eurozone start moving towards developing a similar set of economic policies.

Essentially, the Euro takes away the barrier of multiple currency transactions that held back some users from shopping online and some vendors from launching e-commerce sites.

A couple of years ago, I alerted our readers to the fact that Europe was quietly rising as a new giant in the global E-commerce arena. With the rise of the Euro, this message is becoming more important. Now that a market of almost 150 million people has been created, the US is no longer the only place where E-commerce can work and as such, it is important for people in the US to start looking at technological developments in Europe. In the long run, a number of European companies will probably become some of the larger players in the online space.

Wireless connectivity

While everyone in the U.S. is starting to pay attention to WiFi, the wireless computing revolution has not yet taken hold in Europe. On the one hand, cell phones keep getting smaller and offering more features (Multimedia messaging is started to take hold among European digerati), there seems to be some lag in the adoption of wireless computing offering. A few underground efforts are getting organized, in a fashion similar to that seen in the USA a couple of years ago.

Conclusion

The Internet space in France seems to now follow a curve similar to the one experienced in the United States in the late 1990s. However, the lack of venture capital and the fact that, much like the United States, France is suffering from an economic slowdown, have tampered the explosion. While acceptance for everything Internet is growing, the adoption of networked technology is following a course that is different from that of the US and UK. While there will be strong growth in the Internet field in France over the next year, expect that revolution to be relatively quiet, compared to what was experienced in other countries.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Internet in France 2002: An overview. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

I’ve been looking at the press coverage and it seems that some of the coverage does not work out. For starters, Boo.com’s failure is not an example of why B2C E-commerce will fail, it’s an example of why Boo failed itself. Nor is it a failure of E-commerce in Europe.

Now that the company is buried, I’d like to take a look at what went right and what went wrong with the company and go into more details as to what we should learn from that failure. I will try to summarize what I learned over the 6 months I spent there but I may be off a little here and there since it’s been a while since I’ve left the company.

Boo was the first company to launch from the ground up in multiple countries from day one. This represented a set of challenges that were previously unadressed, ranging from technology challenges to more traditional issues in generating a global brand. While I was working for Boo, I was in charge of developing the back-end fulfillment system, a platform that allowed us to handle multiple currencies, multiple languages, on the fly tax calculation, and integration with multiple fulfillment partners. Let me go into more details on what this means.

Multiple currencies

If you want to trade globally, you can’t only offer US dollars. As a result, you need to figure out a way to handle multiple currencies ranging from dollars to pounds to liras to francs, to deutshmarks, to kroners, etc… If you are planning on doing this well, you have to peg your prices to a particular value. However, you have to realize that prices are not the same in every country and what may seem expensive in the US can be seen as cheap in other countries. This is where you have to make a decision as to whether you want to set a fixed price in the local currency or set a more dynamic price that is affected by currency exchanges and other fluctuations. It’s a fascinating problem in and of itself but it’s one that we discovered to be a big pain to deal with.

In the end, Boo built a system which allowed us to set a different price for each country or set a single price for all countries and have that price be translated in the proper currency based on a set exchange rate. It was a bit of a kludge but it worked and, to this day, I haven’t seen an Ecommerce shop with a similar system.

LESSON:

When dealing across multiple countries, decide early on how you want to set up your pricing scheme, it will save you headaches down the road.

Multiple languages

First of all, forget translation software packages. They are still relatively immature and there is (at this point anyway) little hope that they will mature much beyond their current point in the near future. If you’ve taken any linguistics course, you know that grammatical rules can hardly be standardized for several languages. For example, something as simple as a verb can become a whole new set of problems. In English, there is a relatively small set of basic rules. The verb “to want” breaks down into “I want, you want, he wants, we want, you want, they want”. Notice that there are only two basic variations here. In French, the same verb “vouloir” breaks down as follows: “Je veux, tu veux, il veut, nous voulons, vous voulez, ils veulent.” In this case, there are 5 different variations. In spanish, it’s six… and so on. Take that problem and try to automate it and you are building a system that is bound to fail. The way we worked around it at Boo was to create a system where the copy was translated by hand by people who were fluent in the language.

Unfortunately, another problem cropped up: British English and American English are EXTREMELY different. Considering that the assumption was that one version of each language was sufficient, problems cropped up and some of the perfectly normal British english stuff ended up being very offensive in the US. THAT was a major problem.

LESSON:

One language per country can be a dangerous road, check with the locals before making anything available to the general public.

On the fly tax calculation

This one almost killed me. In the US, it’s relatively easy to deal with taxation. For the most part, the only taxes you have to pay are for states in which you have a physical presence. Where it gets tricky is when your servers are located in one area and your offices are in another. Technically, that is two locations.

In the case of Boo, it got worse. For example, a sale to France was taxed three ways. Why? Quite simply because the company had offices in Paris, its servers were located in London, UK and its distribution center was in Cologne, Germany. However, the interesting part of the problem was that we were making a sale but not delivering a good in the UK, delivering a good but not making a sale in Germany, and making a sale and delivering a good in France. This was just one example. Multiply that by the number of countries the company was doing business in and it soon got VERY complicated. Add to that the fact that certain goods were coming from China or Taiwan and the picture got so clouded that we had to bring in tax attorneys to help us on the details.

LESSON:

Hard to believe, but accountants and tax attorneys should be part of your development cycle if you are developing global Ecommerce apps.

Integration with multiple fulfillment partners

The main issue here was dealing with different file formats for DeutschePost (the European fulfillment company) and UPS (the company that did fulfillment for the US). What we ended up doing was create an EDI link to those guys (DeutschePost was not web-enabled yet) and create a set of filters for each of them. A simple answer to a simple problem but this little answer cost about 150 man months of work as the content had to be migrated from the old (untagged) setup to the new one. Because the original database was originally set up wrong, we had to totally reorganize the schema and refit the content into it.

LESSON:

Plan early, think of all that can go wrong, and then plan it again. Usually, spending more time on specs saves you from many headaches down the road.

Where’s the plan?

When I joined the company in August, the launch was behind schedule by three months and we had ten weeks to the Christmas season. The first thing I asked to see what the project plan. It didn’t exist. People were working on bits and pieces of the project without communicating with other people they were affecting. Within a week, we put together a MS-project chart and things started to move properly.

LESSON:

An e-commerce project without a development plan will always be “this close” to launch but will never launch.

Front end is technology

One of the biggest failures at Boo was to assume that the front end was not a technology issue. Up through launch and beyond, the front end team was first reporting to business development and then to marketing. This was a capital mistake that I kept fighting over. A web site front-end is interface design, it’s not a marketing exercise. It should include people who are versed in this and not just people who know about pretty colors. Ultimately, I think this was one of the big failure factor in the company.

LESSON:

No matter how good your backend systems are, the users will only remember your front end. Fail there and you will fail, period.

There are many other reasons for which Boo failed (I’d rather not go into them but I can say that the press is on the mark on a lot of their accusations) but ultimately, there were a lot of really smart and really good people there who worked very hard to put together what, to my mind, was an amazing back-end operation. Lack of communications to and from the top was definitely a problem as well as a lack of understanding of Internet time (the redesign of the site I heard about on the day after launch has not yet happened and probably never will now). In the end, though, Boo’s failure was not that unexpected to anyone who had worked for or with the company. Boo.com did not fail as an Ecommerce company, it failed as a company, period. The thing that took it down were not Ecommerce related as much as they were just plain business. Yes, I’m a bit saddened by the fact the company went downhill but I already knew this was going to be the outcome back in January when I left.

Ultimately, Boo is a typical example of a lesson that many VCs are pushing these days: Management makes or break a company.

Let’s hope we all take that lesson, remember it, and let Boo stand as old mistakes we will never make either again (for those of us who made them) or at all (for those who haven’t).

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Boo.com Goes Bust. You can follow him on twitter here or receive his weekly newsletter by subscribing here.