Even Microsoft couldn't crack it, but eHow daddy still wants to try it
Ecommerce, that is, despite Brazilian job wax
eHow owner Demand Media seems unmoved by the announcement that even mega tech palace Microsoft has bowed out of ecommerce. Demand has decided to give it a go, albeit on in a niche market and on a much smaller scale, with the acquisition of arty ecommerce site Society6 for $94m in cash and shares.
Demand, which also owns Livestrong and Cracked, said it snapped up the marketplace to diversify its business model.
Society6, which has around 300,000 sellers, helps artists and designers to sell stuff like smartphone cases, T-shirts and prints directly to customers. It was set up four years ago and has already started making money, reporting around $15m revenue in 2012 and $4m in operating income.
“We intend to expand Society6 by offering their unique marketplace to our existing media audience of over 100 million unique global visitors per month," Demand chief'n'chair Richard Rosenblatt said in a canned statement. "In addition, we plan to leverage our expertise in managing content creation platforms, our experience in building creator communities, and our significant engineering and product resources to further drive Society6’s scale and growth.”
However, the company also said that it was cutting its second-quarter forecast because it was getting as much search engine referral traffic as it had hoped for. Demand dropped its revenue forecast to a range of $100m to $101m from $105m to $107m and said earnings before tax and other deductions would be between $26m or $27m.
Demand has been around since 2006 and has built a business on freelance-written how-to and explanation articles, answering queries on topics from travel to medicine. The firm makes its money through advertising, but relies heavily on search engine referral and has been suffering as Google tries to rank articles based on perceived quality. ®