Supermarket blows £70m on kid-commerce site
We knew nappies were expensive but...
Supermarket Morrisons is spending £70m on buying Kiddicare.com - a UK-based website which flogs stuff for kids and babies.
Morrisons said the big buy was just a first step into developing its ecommerce business. The site will continue to function as a stand-alone site run by Scott and Elaine Weavers-Wright.
The company turned over £37.5m last year and claims 75 per cent growth in the last three years. Some 80 per cent sales are now online.
Kiddicare was founded in 1974 and has the UK's largest baby stuff showroom in Peterborough. It now employs 130 staff who last year dealt with orders from 400,000 customers.
Morrisons said it wanted to use the Kiddicare platform and management to expand its non-food retailing. It expects to launch its first new products in 2012.
The deal closes on 23 March, assuming Kiddicare can satisfy certain conditions - if not Morrisons can cancel the deal.
Not a site
They're not buying a site. They're buying a business, with existing customers. I could build them a site, but it wouldn't come with £37.5m of turnover.
Seventy-five percent growth
I think a significant contribution towards that 75% growth is due to two factors: being told three years ago that my wife was pregnant; and her PayPal account...
Are they buying the shop too?
If they're buying the web site and that generates 80% of business, does that mean they're also buying the shop or are the original owners keeping 20% turnover for themselves?
I know setting up an ecommerce web site would cost a bit, but are they absolutely sure it's worth spending £70m on an existing site? Don't see Tesco's doing that - when they want to do something they just seem to set it up themselves, like Tesco Direct. Noteably, they seem to make a lot more money than Morrisons.