-There is enormous risk involved, [dstore] is very much classed in the industry as a hot potato if anyone touches it," E-Store managing director Steven Spilly told ZDNet.
According to Spilly, E-Store was looking at acquiring the assets of dstore when its administrators Ferrier Hodgson placed the company up for sale recently. However, after closer inspection -liabilities would be very difficult to quantify," E-Store decided.
-Apart from the customer base I really can't see what the other assets are," Spilly said, adding that the customer base is only worth around AU$50,000.
HotShed announced today it had placed a bid to acquire dstore for AU$615,000, which Spilly described as -enormously high".
Spilly says one problem with dstore is that the majority of its customers would spend on average AU$50-100 per order, compared to E-Store's average sale of AU$750.
-The volume of transactions before you meet critical mass is way too high, it's hard to make a profit on that," he said.
Spilly also claims the etailer focused too heavily on attracting a market which needed to be educated about online shopping, compared what E-Store describes as its own customer base of early adopters and technology buyers.
On top of its ill-focused customer base, Spilly says dstore stored a lot of its products in its warehouse.
-Even if we sell 100 of the same product in a month, we won't store it in our warehouse,"
-There was a lot of investment involved in dstore, I mean it went out and bought thousands of dog collars, which is a huge liability," he said.
If Ferriers wasn't to accept the offer from HotShed I would think them to be negligent or insane. What a ridiculously high offer for a company that has sustained so much brand devaluation. Common sense will tell you that the customer base is virtually worthless anyway as the competition is only one click away. When are marketers going to realise that you pay for customer loyalty, not a list of names and contact details!