Business marketplace platform Blur (BLUR:AIM) is expanding, in future it wants to supply products as well as services. It's a bold move that, if pulled off successfully, would mean Blur becoming a place to go for businesses looking to run marketing campaigns, get legal advice, engineering components and computer hardware.
'Corporate organisations have been asking us to extend our offering beyond services, because they want to be able to implement a single end-to-end solution to drive savings across a broader range of their indirect spend,' Blur O Philip Letts says. Investors appear to largely agree with him, for now anyway, egging the share price 2.5% higher to 5.25p.
But it is also puzzling. Buying time and expertise of a professional is very different to buying widgets, which need to be physically sourced, delivered, and possibly returned. That requires an extensive supply chain and detailed stock management.
As TechMarketViews' Anthony Miller says, 'you have to be geared up to manage out-of-stock and short or incorrect delivery situations, product returns and refunds. What about warranty handling? And what about cross-border taxes and duties? The list goes on.'
There's also the question of margins. These are far fatter (typically) on professional services than physical goods. Blur has struggled to get close to turning a profit on its planned 20% commissions, the business won't get close to those percentages on volume product reselling, where margins are notoriously low and only the slickest operators make a profit at all.