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.

Published by Lance Wiggs


3 replies on “Ferrit. Incompetent. #3”

  1. Just from their PR this morning (20 Dec 2006):

    “Auckland, 20 December 2006 – Traffic at shopping website Ferrit is growing steadily as Kiwis begin to take the site’s new online shopping carts for a spin.

    On Monday Ferrit had its highest traffic day ever with 18,240 visitors.

    Ferrit’s shopping cart went live on Wednesday 22 November. In the week beginning 20 November, Ferrit received 52,470 unique browsers and the average order was $87. In the week beginning 4 December Ferrit received 63,253 unique browsers and the average order value was $125.”

    There you go… fod for thought.


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