Ferrit – $36m flushed….

I missed the money quote

“Mr Brayham says Telecom expects to spend about $12 million on Ferrit in the next financial year, matching its contribution for the past two years.”

That’s $24m dropped on a site that delivered $12,500 in revenue in the busiest shopping month of the year. Alternatively that $24m dropped on 2,700 paying customers in December, which is $8,888 per customer.

Or let’s say that’s $36m by end of 2007 dropped on …. oh why bother – there simply is no way to make the numbers work.

In fact to make $12m in 2007 Ferrit would need to handle $200m of sales (at 6% take rate). To make $36m (cumulative spend to end 2007) they would need to sell $600m worth of items. If you try to make a discounted cash flow work on this then the assumptions will be laughable. Even given the sunk $24m cost, there is no way I could justify an investment of $12m in Ferrit in 2007.

This dog is dead.

Or maybe it isn’t. After all the site exists, and love it or laugh at it people do know the name. Ferrit could perhaps be saved by cutting all non-online advertising, by slimming down non-dev staff (to about 3), bringing dev in-house, losing the ad agencies and other external suppliers and focusing on usability, great customer experiences and usability. (repeat deliberate)

Published by Lance Wiggs


7 replies on “Ferrit – $36m flushed….”

  1. Pingback: Adam in the City
  2. Ferrit is building a business and it is going to take a few years… and yep, quite some investment. We were happy with our numbers over Christmas. They were small but they are growing. We have been generating revenue for 14 weeks… do you know of businesses that are cashflow positive after 14 weeks in operation do you? Peter Wogan, head of marketing for Ferrit.


  3. Peter – you are in corporate La La Land – put your head into the market proper and understand that Ferrit is a marketing scam brought on by your ad agencies need to make more revenue out of Telecom since the collapse of the voice business (seen any fluffy animal toll call ads lately?)


  4. Blame that guy from the ads… But seriously, this is another great example of Telecom showing their age. This reminds me of the time that my Dad showed up at a friend of mines party – sure he had all the cash to buy everyone drinks, but you know that nobody really wants to dance with him.


  5. Our shopping cart went live on 22nd November 2006. That’s 14 weeks give or take a few days. We launched the search and compare site a year before that. All part of the business plan. And we’re please to say that our customers are saying they love it. And telling us what we need to improve and we’re working on that stuff. Take off the eye patch guys.


Comments are closed.