Ferrit Folds

In a move that will surprise almost no-one, Telecom is closing it's online shopping site Ferrit. When the site was launched in late 2005, I was left wondering how Telecom expected the site to draw customers and, you know, make money. Apparently the people running the show were still wondering the same thing. Something that may surprise many is the massive amount of cash Telecom has been reported to be pumping into the business; $15 million startup costs in the first year, and an additional $12 million in each subsequent year. That is a lot of money for a business which doesn't make any money. As a result of the closure 37 jobs will be lost or reallocated within Telecom. Is it just me, or does 37 people sound like a lot of (wo)man-hours for a fairly average website? Hmmm.

Ferrit General Manager Ralph Brayham is using the currently trendy "Global Financial Crisis" excusology, claiming that the success of the site was dependent on a constant stream of new retailers signing up to expand the product range, and the current financial climate was scaring potential retailers off. A more cynical observer might say that their business model was fundamentally flawed, and that someone has finally realised this and pulled the plug. Current indications are that online businesses may in fact do relatively well in the current financial downturn, as consumers look for more cost effective ways to get what they want. Online retailers in the US have continued to show increased revenue over the past year, or at worst, had their growth stagnate momentarily.

I am still left wondering why Telecom expected customers to use Ferrit? After all, almost all retailers listed on the site had their own web presence, and often products could be bought at a lower price from their own site. Ferrit certainly wasn't faster, wasn't particularly pretty, and didn't have any additional functionality, so what was it's drawcard? Even a reviews system might have added some value to it's product listings, but no, we didn't even get this, something which is a staple of your average US online retail site these days. In my brief experience with Ferrit I found only one advantage; the ability to buy a number of products from a number of retailers, and pay only one bill. Sure that make things easier, but it was never going to get me shopping there if the price wasn't right. Perhaps there's an opportunity out there for someone to create a combined shopping cart for NZ online retailers, the same ones that were on Ferrit, but it might be more trouble than it's worth.

Whatever Telecom's motivations were, soon Ferrit will be just a ghost on the servers of the interwebs, but there's one thing we can all be glad about; we don't have to put up with those god-awful TV ads any more.