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)