Vaughan Rowsell

Ferrit, an expensive lesson.

January 13, 2009 at 7:19 am In e-commerce, Rants, 4 Comments

Two years ago I wrote about the relaunch of ferrit.co.nz (with an actual shopping cart this time) and predicted that despite all the things wrong with the site, that eventually Telecom would get there because they have quite a considerable war chest to throw at it, and they will bludgeon into submission the public with advertising. But I actually thought (out of despair) they would get their act together and actually spend the money on delivering a better online shopping experience to the public. But two years later, (three years after first launch) what have they done?

Spent money (predicted $36M), did no innovation targeted for the consumer and built a site does what it did two years ago.

Where did they go wrong?

PEOPLE ARE NOT THAT LAZY: Ferrit fell for the misconception that people will shop online in their undies because they can and it is less work than going to the shops. People are not that lazy. People love shopping. The trend is to research online and then buy in store. The exceptions are books, DVDs and music and similar. But if you are shopping for a chrome toaster, people like to look at their reflection in it first. So to change this behaviour you need to give some incentive.

NO MOTIVATION OR INCENTIVE: There was no reason to actually buy from Ferrit. It is as simple as that! You could get everything in store, or even from the retailers website direct.

PRICING: If you are shopping online you would expect to get a discount, not pay the same as you would in store. Especially when you have to add shipping.

NO COMMUNITY: After the toaster review fiasco, any chance of community fell apart. At best Ferrit just became a directory of retailers and a catalogue of their products.

ANNOYING ADS: Those TV ads were a shocker. They were funny at first, but then got really annoying really quickly.

BAD COMMERCIAL MODEL: Looking at the retailer agreements Ferrit had with it’s retailers, they expected some pretty sizable commissions from the sales, and this varied depending on the type of product being sold. On top of the Ferrit commission, the retailer needs to make a commission too, so where is the room to give the consumer a good deal. There is NONE. Ferrit became just an extra clip of the ticket.

THEY FORGOT ABOUT THE CUSTOMER: I kinda get the feeling Ferrit thought the retailer was the customer, and forgot about the people who will actually part with their cash.

What amazes me most is that they ignored all the advice and criticism that came from the industry. Everyone, but Ferrit it seems, knew their model was a failure. And they didn’t adapt.

Will anything fill the gap, well is there a gap? I think Trade Me have it pretty much covered. Otherwise, if you are a retailer wanting to sell online, then there are plenty of plug and pay shopping tools that you can plug into your own site. Then you can keep the Ferrit commission, or you may actually want to give the consumer a deal, and an incentive to buy from you online.