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This article in Internet Retailer caught my eye this morning. I was impressed by the numbers until I saw their net profit.
It reads, to me, like another company from the dot com bust. They handle many millions of dollars and forgot that you're supposed to keep some for the company too.
I know I shouldn't be, but I'm surprised that a company could handle that much money and not make a profit.
What was more interesting to me was the drop in conversion rate from 1.4% to 1.2%. I would have expected a higher conversion rate from a store carrying as much merchandise as they are.
But it does not seem right that they sell 8x as much as we do, but we made 5 times their last years profit.
They must be operating on really small margins, or (most likely), they have a ton of overhead.
For the quarter, marketing expenses totaled $3.4 million
Our business has pretty tight margins, but over the past year or so we have cut our overhead by 10-15% even with rising prices.
[edited by: Wlauzon at 4:52 am (utc) on May 30, 2008]