http://w w w .ecommercereport.com.au/?p=1644 May 25, 2011

Nine Entertainment steps into online shoe retailer-StyleTread.com.au « eCommerce Report

Mark Rowland & Bjorn Behrendt

It may not be as much as the reported $4million, but there isno doubt that nine entertainment limited has taken asignificant, minority stake in new online retailer –StyleTread.com.au.But why? Neither nine entertainment, nor its owner, – theinternational venture capital company CVC, are renowned asinvestors in online retailing. Indeed, whilst nine entertainment is a half-owner of ninemsn, itrecently sold out of its interest in carsales.com.au.Similarly, StyleTread is barely six months old, and can hardly havedemonstrated its profitability.Moreover the online fashion shoe retailing segment in Australia isalready quite crowded. So there is no certainty that StyleTread isgoing to either live long or to prosper.Here at eCommerce Report, our usual in-depth research has ledus to consider a number of theories as to why nine entertainmenthas invested.

Our first theory is that nine entertainment investedbecause they became convinced that StyleTread isgoing to prove very profitable and very successful.Certainly the company is claiming to already beAustralia’s leading online shoe retailer, andforecasting very strong growth for online shoeretailing in coming years.Compared to an estimated 3% of the marketcurrently, joint managing directors and co-foundersMark Rowland and Bjorn Behrendt areprojecting online will hold a 15% share in just a fewyears time.“The shoe industry is valued at over $2bn and all theforecasts suggest that at least 15% of this industry

will be sold through online channels over the next couple of years. “Nine entertainment may believe that StyleTread is likely to take a disproportionate share of thatgrowth because it has brought something genuinely new and attractive to online shoe retailing inAustralia.Certainly, there is one thing that distinguishes StyleTread from its competitors, and that is itsremarkable policy on returns.StyleTread offers free returns up to 100 days after purchase as well as free shipping.Customers who decide they don’t like their shoes can, so long as they are still undamaged and inthe original packaging, return them at no cost and for a full refund.As explained on the company’s web-site, it has contracted Australian Air Express both to deliverits shoes, and also to pick up returns.”Most of our top customers order 3-5 pairs of shoes at a time, try them on at home and then sendback the ones they don’t love for free “said Rowland and Behrendt.For most retailers, whether online or off, the cost of handling returns and warranty claims issignificant when compared to their margins.So it will be interesting to see whether the company can make profits with this policy.

Our other theory about nine entertainment’s investment is that it is as much an investment in peopleas it is in a business.That’s because the two founders are well-credentialled in business.Rowlands is the former CEO of noodle restaurants in Australia for Wagamama and a formerbusiness development manager at Coles-Myer.Behrendt is a former senior eBay executive from Germany who, up until last year, had beenresponsible for a number of German online start-ups.Rowland and Behrendt have recruited a team of 20 or so staff and have stocked a large warehousein Sydney with thousands of shoes from both Australian and international fashion brands.

For more information go to www.styletread.com.au

For other online shoe retailers in Australia check outwww.wittner.com.auwww.wantedshoes.com.auwww.shoeshed.com.auwww.ninewest.com.auwww.shoesofprey.comwww.nineentertainment.com.au