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Blame it on the pressures of being publicly owned. San Francisco based Red Envelope did $120 mil in customized gifts and managed to lose millions year after year.
I see that REDE is blaming some of their problems on the high cost of PPC ads. Their SEC filings contain a lot of insight into what went wrong.
No doubt a couple of hardworking frugal guys operating out of a garage in Iowa or Alabama could get rich in the same business line doing $5 mil in sales.
You can run an ecommerce operation from from anywhere geographically, they chose downtown San Francisco. Bad idea. I guess that would give you lots of options for lunch but would be very pricey office space and your employees would command a high wage.
27% of their revenue went to marketing. That's how you do $120 million; that's how you go bust.
No wonder they had to buy all the traffic.
URLs from search engine hell. For example:
[edited by: lorax at 3:43 pm (utc) on April 7, 2008]
[edit reason] added line breaks [/edit]
They went to SF to get the best talent which commands the best wages. Just like everything else they suffered from overconfidence, greed, envy, needing to go public to raise gobs of money right from start, take over, the list goes on and on. A good dose of humility is not a bad thing in business.
"As one of the only successful pureplay e-commerce sites to launch and maintain a catalog business, Red Envelope was a multichannel retail success story. However, like for Lillian Vernon, which was sold to Taylor Corp. last week at an auction , and a host of other retailers which have announced significant cutbacks this year, 2008 is not shaping up to be a good year. .... Order shipments during the third quarter dropped about 20% compared with last year."
Why don't you buy up the stock and send out 100,000,000 emails about your plan to take over WebmasterWorld?