A Queensland-based software developer has become the owner of dstore.com.au, purchasing the failed online e-tailer from the administrators of dStore's parent company, Harris Scarfe.
In December last year, Harris Scarfe scooped up dStore for $3 million to bolster its e-commerce activities. Harris Scarfe, in turn, placed itself into the voluntary receivership of Ferrier Hodgson in April 2001after unveiling financial irregularities amassed over six years.
Under the terms of the agreement HotShed will purchase only the brand and customer database of dStore, according to Andrew Cooper, chief executive officer of HotShed. In July HotShed initially tendered an offer of $615,000, but Cooper was unable to reveal the final sale price.
The deal did not include dStore's technology platform, inventory or staff. Instead, HotShed will use its own supply agreements and look to showcase its proprietary e-business software as an example of how to make e-tailing profitable.
"The problem with e-tailing isn't with the consumer, it's with the proprietor. The market is doubling every year," Cooper said. "The key to e-tailing profitability is to get costs under control.
"HotShed's e-business platform will strip away approximately 85 per cent of the old dStore's fixed costs therefore laying the foundations for profitability at very low sales volumes," he adds.
HotShed expects the venture, which will operate as a separate business unit, to be profitable within three months. The restructured dStore will employ between four to ten staff depending on the season. The fate of dStore's former staff is unknown at this stage.
While Cooper is pushing automation as the key to dStore's success, HotShed will also rationalise its product range, focussing on compact disks, videos, toys, books, DVDs and games.
"dStore had a large range of product categories such as pet supplies that had not matured into a viable e-tailing market. The new entity will concentrate on categories where consumers are already purchasing online with a gradual approach to new lines," Cooper said.