HotShed eyes dstore

Dstore, that famed failed online etailer has reappeared in the headlines again after an offer was put forward Monday by Brisbane-based technology company HotShed to purchase the company for a mere $615,000.

The offer is currently in the hands of dstore's receiver Ferrier Hodgson.

HotShed CEO Andrew Cooper claims he is convinced he can turn the fortunes of the failed dot com. Should HotShed besuccessful in it's bid, the process would start with rip and replace of dstore's existing software infrastructure infavour of HotShed's proprietary ordering, CRM and back-office suites.

Cooper is convinced there is little value in the systems dstore implemented. "The value of its [dstore's] software isdemonstrated by the losses this business has incurred," he said. "HotShed will demonstrate the power of its [own]systems by turning a public etailing failure into success."

And a financial failure dstore has been. Over a year ago dstore was valued at $30 million. But for all the moneypoured into it by some of Australia's wealthiest investors, the retailer continued to lose. Then in December clothingretailer Harris Scarfe - wishing to bolster its e-commerce activities - scooped it up for $3 million. Harris Scarfe,in turn, was placed into receivership this April.

According to Cooper, if his company got its hands on dstore, it would be able to make a $200,000 profit in the firstyear. Primarily, he claimed that this would be because HotShed would be able to run dstore with just 10 employees,which is in stark contrast to dstore's peak of 120 staff. In Cooper's view, when dstore began to increase its ordersand sales, it equated to an increase in staff, and thus costs. "They needed to automate this," Cooper said. "Lots ofmoney was spent in manning an order. An order should come into a system and it should dispatch a product at the otherend automatically ? without any manual process."

Compounding its problems and contributing to high costs was the fact dstore used to handle its own warehousing,Cooper said. "We form strong links with our own established suppliers and link our own software to theirs." In otherwords, HotShed sends out the order directly to the suppliers, who then dispatch the product from their own warehousesto the consumer.

Cooper backed HotShed's technological ability as it is already using "version one" of its software on its whollyowned etail site TopShop.com.au. "TopShop is a testing ground of our technology and systems," he said. The site,which sells interactive game software and hardware has grown from nothing to be a small player in this niche marketin just two years. It has a projected sales figure of about $500,000 this year. Significantly it employs only ahandful of people, deals directly with suppliers and dispatches products within 24 hours ? methods which Cooper saidhe will bring to dstore.

However, while TopShop has virtually no branding in the B2C market, dstore does. Cooper said HotShed's main interestwith the etailer is its customer base and brand name. "We will apply that customer and brand power and do a farbetter job," he said.

More about DstoreFerrier HodgsonHarris Scarfe AustraliaHotShedtopshop.com.au

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