Ferrit should not close down

While it is very clear that Ferrit has failed as a business, I do not believe it is as clear that it should be closed down.

The reasons for the business failure are usability, costs and strategy. All three can be worked on, and from the evidence, I don’t think any have been given a fair chance.

The change required is enormous, and perhaps Telecom doesn’t have the appetite, which as a giant corporate focused on greater things, is probably right.

I do, however, believe that a clean break under new management could make something work. It would mean starting again in a way, and based on much lower traffic, but organic growth.

Here are four things I would change to try to make Ferrit work:

Dramatically lower the cost base

Shut down advertising completely, fire the external developers and marketers and reduce staff numbers from 37 to, oh, about three. Those three should include say 2 developers and one business oriented person. The focus would change to attracting and retaining customers through word of mouth marketing and a great site experience.

Improve site usability

Systematically identify issues, prioritise them and change the site to make it easier to use. Be very open about what you are doing, and ask your visitors for feedback in a forum/blog. There is plenty of work to do here, but nothing that a couple of great programmers couldn’t handle.

Find a strategy that works for suppliers and customers

Lower the commissions payable by retailers so that they don’t feel pain when selling through Ferrit. Meanwhile offer discounts that eat into but never exceed the commission for other products. Keep the retailers happy by being pain free, and by driving results. This is the hardest part to get right, and without seeing the inner numbers I cannot say whether it is even ever possible to achieve.

Move to Wellington

Wellington is the design, usability and web development center in New Zealand. Moving Ferrit means access to the great local talent, great feedback from the community and a complete break with the old culture. The rents are cheaper, the talent is better and the community is simply stunning. If you are in the internet in New Zealand then come to the home of Trade Me, Ponoko, Plan HQ, Big Ears, Silverstripe Xero and many many others. It’s all tied together by several communities, including the internationally acclaimed Webstock.

What do you think – can it ever work?

Published by Lance Wiggs


22 replies on “Ferrit should not close down”

  1. What frustrates me is that Telecom botched an opportunity and probably alienated the major retailers from trying this sort of thing again. The idea was good, but their execution was flawed. In some areas they got noticeably better but they got too many basics wrong. Out of all the people they hired and all the resources at their disposal could they not find ANYBODY to tell them things like, “hey, there’s too much text on the product detail pages and it’s all faint grey and tiny font” OR “hey, i did a search for a widget and got back bogus results”. As time went on Ferrit slowly got better, but not quickly enough.

    In saying that, I think there is room for a Ferrit. I used the service a few times and found it convenient. You see, I find Trademe an ordeal really. I don’t want to bid or buy now and then have to communicate with some sod I’ve never met and fluff about with payment etc. I generally just want to buy the bloody thing from a named retailer and get it delivered without any fuss. Ferrit was great in that I could search for something and check out which retailers stocked it and at what price and then I could make my own choice who to buy from.

    So in that sense I’m kind of disappointed that Telecom sunk 30 odd million into this venture and made it impossible for themselves from the start. How can you even spend that much? It’s not rocket science what they’re doing, but when you’re only revenue model is to clip the ticket on the way through then that’s a LOT of ticket-clipping to recoup those millions. Somebody should do something and save it, there’s a huge opportunity there. It would be a complete waste if Telecom were to simply bin it.


  2. Got to agree with Chris. 30 million is a massive amount for a website. And the Ferrit strategy to me indicated just how far out of touch with internet reality they were.

    Its reasonably simple. Offer products at a discount (including shipping), make the site incredibly simple to use, and… tell a few people about it.

    Perhaps partly it was the fault of the bricks and mortar companies, who have always struggled to sell over the internet, because of their existing cost-structures. But Telecom should have known this and been up-front with them from the start.

    such is life in a corporate!


  3. Can you see telecom commiting to a project that only has 3 people though? The only way I see ferrit surviving is if someone buys it, and who’d do that that hasn’t already got a successful site?


  4. Rua – you are right a 3 person business is beneath Telecom’s materiality radar.

    But they have invested a lot into this business, and as any good parent I am sure they would like to see it thrive, even if elsewhere.

    If they are closing it down, then isn’t $1 a good sale price?


  5. Lance,

    You are so right (except for the bit about Wellington – more than enough talent in Auckland!).

    There is inherent brand equity in Ferrit – 3700,000 UB’s last month speaks to an opportunity.

    If someone was smart in Telecom they could have partnered with a company of which there would be many. They could have offered 50% of the company in return for allowing the new partner to run the business – after all it is an e-commerce platform that is transfer ordering processing. Telecom could have incentivised the new partner by offering some investment capital to provide the base to build a new site.

    NZ’ers need e-commerce aggregated platforms as the major retailers are too tightly wedded to bricks and mortar.

    What a waste to shut down a site and park up a domain name !


  6. I agree – keep Ferrit going, but make it better. There’s actually no real magic to it, apart from perhaps cast off the dead weight of Telecom that’s associated with Ferrit now.

    However, three people wouldn’t be enough. Not even Trade Me managed that.

    As for Wellington… well, Trade Me soon discovered that it needed an Auckland office too. Don’t think moving would make any difference as such.


  7. Great post and a positive spin on the situation. Its easy to bash Telecom all the time however still in this case I think a concept like this is better out of their hands or any telco’s control. ISP’s need to stick to the business of providing bandwidth to entrepreneurs to come up with these great ideas.


  8. I agree, Ferrit should not be shut down. I think you could do a few things to make it run on the smell of an oily rag.

    – Invest some time in making it really easy for retailers to add/update products. Make a great API for this and work with other inventory providers to make the process seamless for the small business.
    – Encourage lots of small providers to list their products. Big retailers are slow movers and take too much time and money to get onboard. They can list on the site but it will be under your API and setup. No customisation.
    – Make it really easy to add great meta-data about the products. This will increase the usability of the site and cost you nothing.
    – Work on usability and constantly update the site with tweaks and fixes.

    And Lance, there are some great people up in Auckland. Next time you are here come along to one of our Auckland web meetups. 120+ passionate web people meet every month.


  9. I don’t know, the only reason you would keep the business going is if the brand had good value, unfortunately the advertising campaigns and user experiences have eroded this.

    Time to start all over from scratch


  10. @ray I’m not so sure. Think about it – You could take the site, reinvent it with a skeleton staff and that could be a real success story that people latch onto. If you executed with 1/100 of the resources and produced something far better then that would a story that would spread virally.


  11. @Glen It would be nice to see the site rebuilt and would be even better to be part of it :) but I really think the brand is too damaged , Just look at the name ferrit, it’s not the best and don’t really invoke a positive emotion.

    Its not to say Telecom should give up on the idea all together but I think it would need to be re branded.


  12. Great assessment – would probably add one more which is focus on a small number of shopper categories, build some confidence in these before trying to service every type of product category.

    I got 50 cents if you want to go in 50/50


  13. I agree with everything up to the wellington part, why people think you need to be a specific location to be a successful business is beyond me.

    Awesome post even if I disagree with the last point :)


  14. I’d like to add my $3 for the bid.

    I bagsey director of databases ! (lemme get my hands on them 100,000 email addresses :-)

    I wonder how many of the Telecom employees will get “re-assimilated” into the mother ship??

    We looked at selling our skate hardware and clothing on Ferrit – it was such a clunky site and a very clunky back-end. I’m not suprised it fell over…. still, it’s a shame for the e-commerce image….


  15. Have we not learnt that email databases are web 1.0 – what you want is the content and usability which makes people evangelise and thereby refer about your business / website. I would much rather have rich content that can be presented in an enagaging and appealing manner add a touch of smart SEO and SEM with a dash of SMM and you can beat 100,000 email addresses in a matter of weeks!

    Intruding on people with email is not the future, it is just another form of TV style shotgun advertising.


  16. Hi Alistair

    Since you brought up some good points, I thought I’d respond. I agree with most of your points, and the methods you mention are indeed valuable, if not essential, aspects to any serious online presence.

    However, I think that you’re being unrealistic to simply rely on them alone, for they are only part of an overall strategy.

    Good communication and smart marketing are still valid methods for spreading the word about your products and services (I am not referring to spam that clogs up the entire network and promises larger and longer pleasure!)

    Television works. Radio works. Print media works. And OPT-IN email works. If you think it doesn’t or that it’s not a valid method of marketing, then I would suggest you look at the many and varied businesses that utilise it. One day is a prime example. Ferrit also, but here’s the crucial factor: the online presence has to actually be simple, user friendly and interesting enough to actually engage your audience once they decide to visit!

    I’m not saying that our website http://www.boomskateboarding.com has all the answers, but certainly our numbers suggest that we are on the right track (always room for improvement, I’m sure you’d agree!)

    SEO optimisation is one thing, but a loyal email database is something entirely different. My comment above about buying the Ferrit database was largely tongue in cheek, but perhaps that didn’t come across!


  17. If someone does buy Ferrit let us know (http://5556mall.co.nz) and we’ll help you by adding you to our service. Then people will be able to text in the product that they are looking for and get back that they can buy it from Ferrit or the Supplier stores and how much it costs.

    We’ll add $1 to the pool of “investors” if we can get personally introduced to each of the individual stores.


  18. Ferrit were spending megabucks on Adwords each month – showing up first place for basically every product-related phrase under the sun. But their organic SEO was all but completely ignored. Yes, they did make improvements over time but it seemed to be too little too late.

    I agree with Lance in that a couple of developers should be plenty to keep a site like this going. Do the TradeMe thing and develop good systems that don’t require too much human interaction. Focus on good organic SEO instead of paid search marketing. Focus on user experience etc, and do the whole thing on a tight budget so that getting a ROI out of the site is actually achievable. With the costs Ferrit were clocking up, they never really had a chance of getting any ROI. How can you make any money when you have a few dollars margin on a product, and you are paying a few dollars a click for advertising?

    The domain is in a good position now to be picked up by someone who can revamp it and create some buzz. It should be easy enough to get a list of honest complaints/feedback from retailers and customers (just ask them). If someone revamped the site with this feedback in mind, it would generate buzz in the media and the project would have a chance.


  19. Hello all! I like this forum, i found numberless inviting people on this forum.!!!

    Large Community, respect all!


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