Internet Retailer has a lead story today about how the analytics player Omniture has swooped in and picked up the e-commerce platform provider Mercado for a song! The story says that Omniture was able to buy Mercado for a measly $6.5 million after Mercado has been pumped with over $65 million of capital over the years.
It’s not really all that surprising to me to be honest. I’ve gotten so many sales calls from Mercado over the years trying to sell me their insanly overpriced offering that it just seemed unsustainable. Not only that, but their advertising was everywhere! Like Dot-Com boom-everywhere in the e-commerce space. They were prime sponsors or significant sponsors of so many shows that I’d attend. They had to be paying an insane amount of money for all that advertising and sales effort.
It always seemed to me that they must be overcharging for their software to keep the marketing and sales machine chugging along and now that suspicion has been proven correct.
I’m willing to bet there will be a lot more providers like this falling in this little e-commerce dot-com 2.0 bubble burst. The business and revenue models of so many of the companies that I see at shows like Shop.Org and Internet Retailer are straight out of 2000 before the bubble burst. They all seem to be built around going after the big guys (the 20% in the grand e-commerce market) in the Internet Retailer Top 500 and charging top dollar to do it, when the same solutions could be offered to the remaining 80% if they would have a decent pricing and servicing structure.
Although this time it’s worse because most of these companies are run by suits from the East Coast that are totally clueless beyond anything but the deal.
At least during the dot-com era the jokers driving their Titanics into the same iceberg over and over were a lot of time nerds, geeks, or other variety of egghead that actually knows something that were inadvertently elevated to the position of businessman. This time it seems that it’s being driven by empty suits with a smile and a handshake from the beginning.
I’m still amazed that anyone is investing any money in these companies, let alone $65 million!
Fools and their money.
There’s a lot of big hitters out there who’s CIO’s have got to be getting a pretty interesting presentation ready for their bosses!
