Dot com donuts: learning from past mistakes

In these times of economic woe, it's worth casting our minds back just ten years. The Spice Girls were slogging their unstoppable industry around an unsuspecting world, to the joy of soft drink and doll manufacturers everywhere. James Cameron's Titanic well and truly dodged the iceberg at the Academy Awards, sweeping up a staggering eleven Oscars. And in the business world, it seemed everyone was falling over each other for a piece of the 'dot com' pie.

The story was a simple one. The explosion of the Internet from the mid-1990's onwards heralded a new platform for business. Start-ups were straightforward; attract a nice sum of investor cash, buy your dot com domain, splash out on extravagant headquarters full of colourful iMacs and space age furniture, then launch yourself with a fanfare and lay the marketing on thick. 'Growth over profits' was the philosophy – revenue may trickle in slowly, but once the brand and customer base expanded, the money would come flooding in.

It seemed that anybody with a little entrepreneurial flair and a brilliant idea joined the race to take the web by storm. Obviously, hindsight is a wonderful thing, and today it is easy to understand why the bubble burst. By 2001, businesses were tumbling in a sea of anti-monopolisation lawsuits, lavish excess, dubious bookkeeping, unemployment and a more realistic re-assessment of the markets.

Even if business is tough in the current financial conditions, it's highly unlikely to get much worse than any of these web disasters...

Boo.com
This site is commonly touted as the biggest web flop of all time, collapsing after the failure of the dot com boom. Set up in 1998, the company was set up to sell branded fashion to the masses. The owners managed to get through £125 million in just six months, and the company continued to haemorrhage money until its inevitable liquidation in May 2000. Boo was an early warning sign for the pitfalls of web business.

Flooz.com
One thing's for certain, this idea had plenty of flawz. The website aimed to market a new, universal online currency that would take the hassle out of online transactions. It seemed like a good idea at the time, but the wheels quickly came off, leaving websites like PayPal to acknowledge its failings and create a more viable alternative.

Kibu.com
They say patience is a virtue, and how the makers of this particular website must now look at their lack of foresight in not keeping this community website for teenage girls going. Long before the days of Facebook, Bebo and MySpace was Kibu, but before it was ever given the opportunity to realise its potential, the owners got cold feet and pulled the plug after just two months. The biggest mistake since Gerald Ratner's infamous speech?

Kosmo.com
If something seems a little too good to be true, it probably is, and that was certainly the case with this snack home delivery service. You can't fault the ambition of this project – to deliver everything from food to videos to your door within one hour – but the scale of the plans just proved too arduous for this business, and after getting through £150 million with little market impact, the delivery vans slowed to a halt.

Furniture.com
The aim of online stores is to minimise fixed costs, so it's anyone's guess as to what went through the minds of the developers of this website. After spending £40 million on marketing, it seems clear someone forgot to 'do the maths' – as up to half of all revenue was spent on shipping costs. Flawed from the start, it's a great example of how not to go about online retail.

E-commerce has blossomed since the start of the decade, with the UK online retail market valued at £4.8bn by this July. Web-based small businesses starting out today benefit from the lessons of the dot com boom and bust. Investors demand strong, realistic business plans instead of just a good idea; whilst online marketing and commerce tools are more ubiquitous, cheaper and easier to use than ever in reaching out to potential customers, something we will cover in a future article...

Do you own a successful web-based business? How has the web helped you to attract custom from the local area and beyond? As ever, please get in touch with your stories and thoughts by using the comments function below, or e-mailing businessblog@friday-ad.co.uk.