Telecom gives Ferrit the chop

Telecom has finally pulled the plug on its struggling online retail venture Ferrit.

The website will stop taking orders on Wednesday, with the telco saying the move is “part of the company’s focus on the delivery of its core services.”

Ferrit’s demise has been widely predicted, with many seeing the division as an easy target for Telecom chief executive Paul Reynolds as he tries to revive the telco’s performance and flagging stock price.

Ferrit has a chequered history, beginning when Telecom was forced to buy US pornography portal www.ferrit.com in November 2005 after confusion between the two addresses.

It has never turned a profit.

Telecom retail chief executive Alan Gourdie says Ferrit has continued to grow during the past three years but the current retail environment has meant the break-even point has shifted out a number of years.

“The decision has now been made to refocus and resources will be directed to other areas,” says Mr Gourdie.

Telecom retail head of PR Nick Brown says Telecom’s priority is to try to redeploy Ferrit staff to other parts of the company, but Telecom can’t guarantee that there won’t be any job losses.

Ferrit employs 24 permanent staff and 13 contractors.

The website differs from its much more successful rival Trade Me in that it sold new products from retailers, rather than a mix of new and second-hand goods from retailers and individuals.

Ferrit does not charge retailers to advertise on its website, instead taking a commission from each item a retailer sells. The retailers determine the price of goods they sell on Ferrit.

The online mall started with around 150 retailers in 2005 but this number has since dropped to 90.

Ferrit’s former general manager Ralph Brayham moved roles within Telecom nearly a year ago to take on responsibility for broadband and video services.

Telecom shares are currently trading at $2.38.

 

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14 Comments & Questions

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Yay for the end of those irritating ads!

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...did you find 'irritating' about the ferrit ad campaign?

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Yes but online shopping (and even basic store websites) in New Zealand is appalling compared to the rest of the world. Ferrit at least showed the potential

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When is Telecom going to dump its other loss making departments like its Auldhouse computer training brand? Everyone knows this department is a drag on Telecom's bottom line with its overpaid underperforming managers, trainers and sales people. How profitable is Gen-i ? Not very i understand.Shareholders should be making the Telecom directors far more accountable.

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I LOVED THOSE ADS and will be sorry to see that guy off the air!

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I wonder if Telecom thought about selling Ferrit... Does anyone know what sort of traffic numbers they were getting?

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.. their model was flawed from day one, not just exacerbated by the recession.

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There are some other site which competes with Ferrit and Trademe.

Trade and Exchange (http://www.te.co.nz) and Sella (www.sella.co.nz) are two of the main players I think.

Both these sites does not match TradeMe functionality or ease of use. Trade and Exchange site looks like exactly what they are - an old paper! Really, they need to have a serious rethink of the look of their site and ease of use. True, they are a classifieds only site, but still it needs to look good to compete with other players.

Sella too is very cluttered and I don't like the site design.

So NZ online users sake I wish Trade and Exchange and others will awake to Ferrit's demise and so some proper sites.

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It took Telecom long enough to admit that their online retailing model was wrong and destined for failure. Sometimes no matter how much you kick the dog (or in this case weasel) it just won't sing.

Kiwi's in my experience demand self service - in onlne shopping this usually translates to doing it yourself and seeking out the bargains or solutions best suited, we use the web widely and avail ourselves of the myriad tools and sites to help us complete this research- We are no one's fool and generally savvy enough to know a deal when we find it, but will always compare.

This is why in my opinion sites such as PriceSpy and Trademe work and syndicated online shops (such as ferrit) fail in this market. Stick to your knitting Telecom - how about better broadband for a start?

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Isn't the ex GM of Ferrit responsible for Broadband?

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I don't recall Ferrit advert. I don't recall any except the two babies tearing around in a car (don't recall the brand).

I give steam TV (non Sky) a miss most of the time.

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The name! When you have to explain what you are about to the consumer online, you will struggle to gain traffic?

Millions spent on marketing a name no consumer understood with only the last Ad trying to explain the site....finally listening to consumers?

How many actual experienced 'retailers' were in Ferrit to understand how consumers buy and what was the focus on Sales?

Being funded by Telecom gave the organisation false security and no urgency to turn over profits. If it had been a commercial operation I'm sure it would disappeared shortly after starting or even not pursued from the original business plan (did they have one?)

The only positive thing was that Telecom were doing something positive to develop online shopping for retailers in NZ. The online channel is huge in the US and UK compared to only a fraction of sales online in NZ, the potential is huge.

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Every man & his dog knew that Ferrit was a waste of time & money from day one. Where was the demand? There must be some very big-ego's at Telecom to allow this to drag on for as long as it did. Telecom have been fart-acting around with this rubbish & not doing what they should be doing. The should stick to supplying users of telecommunication services with modern, up-to-date products & services at competitive prices. I for one will abandon Telecom at the first opportunity. Their current prices are a rip-off. Vodafone aren't providing them with much competition, why should they? It's easy money here in New Zealand. What we need is a well funded, agressive 3rd player.

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It shows that throwing loads on money into blanket advertising just doesn't work. You need to target your spending, especially in these tight times.

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