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Bluefly Customer Acquisition Costs Hit All-Time Low

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Posted May 10, 2001 By Ryan Naraine     Feedback

The poster child for e-commerce firms with astronomical burn rates said its cost-per-customer dipped to $41, the lowest in its three-year history.

Discount apparel Web retailer Bluefly Inc., the poster child for e-commerce firms with astronomical burn rates, said its customer acquisition costs this year dipped to $41, the lowest in its three-year history.

In the first quarter this year, the New York-based Bluefly said the reduced customer acquisition costs were 60 percent lower than a year ago when it spent almost $105 to attract new shoppers to its virtual store.

While the jury is still out on whether Bluefly's $41 cost-per-customer remains manageable, the fact that it has consistently cut spending is reason for euphoria by company executives.

Bluefly, which has never posted a profitable quarter, said the reduction in cost-per-customer costs and a 24 percent increase in sales contributed to a narrower first quarter operating loss.

The company, which hawks discounted high-fashion apparel and accessories, reported recorded a net loss of $17 million ($3.57 per share) in the quarter, more than three times lower than the year-ago net loss of $5.7 million ($1.19 a share).

Operating losses reached $3.9 million (77 cents per share), down from $5.7 million, or $1.17 cents a share in the first quarter of 2000.

Bluefly's net sales in the quarter were $4.6 million, up from $3.7 million in the previous year-ago quarter, a 24 percent increase driven mainly by repeat customer visits an increase in the average order size. On average, a customer spent $129 from the Bluefly Web store, up from $99.

Earlier this year, the venture capital arm of billionaire hedge fund manager George Soros converted $20 million in notes into a 72.2 percent controlling stake in Bluefly.

As a result of that deal, Bluefly recorded a one-time, non-cash charge of $13 million. Reprinted from

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