The segment of baby carriages and beds ensures a high average profit and break-even even with low marginality. However, the problem with this segment is the low proportion of re-purchases, since the assortment itself assumes only one-time contact of the buyer at the time of the birth of the child. Output from the adjacent segments of children’s clothing, hygiene products, and food for children was hampered by the fact that for these segments, the key competitive advantage is the delivery speed, which is required to be latest by the next day.
This, in turn, requires a significant amount and substantial investment in working capital. Thus, the choice was made in favor of the sale of the company to a larger industry player that was not strongly placed in terms of its range of prams and cots.
Business: $3M per year revenue, zero profit, more than 1000 orders per month.
Deal: Conducting a large advertising company in exchange of a share in equity.
Deal Industry: Internet, Retail
Deal Type: Media for Equity