Ferrit. Incompetent. #3

Ferrit boss Ralph Brayham says that Ferrit is “aiming for around 300,000 unique users this month, with 2 per cent of visitors buying something.”

That’s just 6,000 buyers. Let’s assume they each buy goods worth $150 (I am being  generous), and that Ferrit takes 5% of that (generous again). That’s $900,000 worth of sales, and income for Ferrit of $45,000.

Income – that’s something new for Ferrit.

Sadly it cost them $5 million in recent advertising to get those customers. That’s an acquisition cost of $833 per paying customer, and a loss of $5 million, near as have it.

Now – I’m being pretty generous with the numbers. Brayham’s numbers are aspirational, and will fall short. Ferrit had 121,000 Unique browsers (Net Neilsen) to Friday the 15th, and there are just a handful of shopping days left.

Moreover the  300,000 “unique users” quoted is probably referring to unique browsers, which clock in at 2 or 3 per person these days, so the 121,000 unique browsers to date is probably 40,000 to 60,000 actual people.

$150 average sales price is also pretty generous for a site that nobody uses or trusts – people like to start low and build up.

and 5% – well  I think that’s overly generous, and it could well be 0% at the moment…

Meanwhile I’ve heard estimates from $30m to $50m for the amount of money dropped on Ferrit so far. At $40m, and given the 150,000 UB’s, or say 75,000 actual people that visited the site in November, that’s $400 to $660 acquisition cost per visitor, or $20,000 to $33,000 per paying (at 2% of actual visitors rather than 2% per UB) customer.

If a customer costs $20,000 to acquire then they would have to spend $400,000 to $660,000 each on Ferrit (@5% take rate) for Ferrit to make their money back. Before discounting for time value.

Give it up.