Pure play

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Pure play refers to a company focuses on a particular product or activity instead of various interests. Investing in a pure play can be considered as investing in a particular commodity or product of a company.[1]

Pure play method[edit]

Pure play method is an approach to estimate the cost equity capital of private companies, which involves examining beta coefficient of other public and single focused companies.[2]


The equity beta coefficient of a public company B is needed when estimating a private company A's equity beta coefficient. The equity beta coefficient of company B can be calculated by regressing return on its stock on the return on the relevant stock index. Then applying following calculation to get beta coefficient of company A.

Unlevered bata of B = (Equity) Beta Coefficient of B / (1 + DEB × (1 − Tax RateB))

(Equity) Beta A = Unlevered Beta of B × (1 + DEA × (1 − Tax RateA))

Where DEA and DEB are the debt to equity ratios of company A and B respectively.[3]

Pure play foundries[edit]

Pure play foundries such as TSMC and Global foundries are foundries who do not have any in-house design capabilities but only fabricate the Integrated Circuits (ICs) for fabless semiconductor companies such as Qualcomn, Broadcom, Xilinx, Nvidia etc.[4] Integrate Device Manufacturer (IDM) foundries such as IBM, NEC, TI and Samsung provides both foundry design services and ICs fabrication.[5]

Pure play E-retailers[edit]


Compared to traditional clicks-and-mortar, pure play e-retailers can serve a wider audiences without physical boundaries and distance. Besides, pure play e-retailers target at specific customer groups without high cost of obtaining information of these groups.[6]


Compared to clicks-and-bricks, pure online internet retails do not have brand recognition and reputation at the start-up stage so it lacks customer bases. In addition, pure plays' customers are unable to touch, examine and test real products before buying them. Furthermore, online shopping experience lacks human contact with consumers which is considered as an effective way to respond questions, provide professional advice and motivate purchases.[6]

Pure play gets physical[edit]

Amazon: Amazon customers in mainland UK with pickup code can get the order at collection lockers which are distributed in shopping centers and commercial blocks.[7] Amazon has opened its first physical stores Purdue University campus in Indiana.[8]

Simply be: Simply be has sixteen physical stores at present.[9]

Net-a-porter: Launch a pop up window shop and apply image recognition technology to enable customers to find video content of the clothes and the online shop.[10]

Kiddicare: A childcare brand, plans to open 12 stores in UK.[10]

Ocado: Ocado has launched virtual shopping wall at One New Change, Birmingham's Bullring shopping center and Bristol. Customers can shop by using Ocado's “on the go” app to scan product's barcode on the wall.[11]

eBay: Ebay opened an inspiration shop in New York in 2011.[12]

See also[edit]

Further reading[edit]


  1. ^ Law, Jonathan (2014). Dictionary of Finance and Banking. Oxford: Oxford University Press Print Publication. ISBN 9780199664931. 
  2. ^ Cox, Larry A.; Griepentrog, Gary L. (1988). "The Pure-Play Cost of Equity for Insurance Divisions". The Journal of Risk and Insurance (American Risk and Insurance Association) 55: 442. doi:10.2307/253253. Retrieved 2015-10-25. 
  3. ^ R, Fuller; H, Kerr (1981). "Estimating the Divisional Cost of Capital: An Analysis of the Pure-Play Technique". Journal Of Finance: 997–1009. 
  4. ^ "What does pure-play or IDM mean with respect to semiconductor foundries classification? - Quora". www.quora.com. Retrieved 2015-11-01. 
  5. ^ Mutschler, Ann Steffora (2008). "Pure-play foundries comprise 84% of market, IC Insights says". Electronics News (Australia: Reed Business Information Pty Ltd, a division of Reed Elsevier Inc.). 
  6. ^ a b Kim, Eonsoo; Nam, Dae-il; Stimpert, J.L. (2004). "The Applicability of Porter’s Generic Strategies in the Digital Age: Assumptions, Conjectures, and Suggestions". Journal of Management 30: 580. 
  7. ^ "Amazon.co.uk Help: About Amazon Locker". www.amazon.co.uk. Retrieved 2015-11-01. 
  8. ^ Johnston, Chris (2015-02-03). "Amazon's first bricks-and-mortar store opens in Indiana". theGuardian. Retrieved 2015-10-25. 
  9. ^ "Simply Be Store Locator". www.simplybe.co.uk. Retrieved 2015-11-01. 
  10. ^ a b "Do pure-play etailers need stores?". Retail Week (London: Emap Limited). 2011-11-04. ISSN 1360-8215. Retrieved 2015-10-24. 
  11. ^ "Window Shopping...". www.ocadogroup.com. Retrieved 2015-11-01. 
  12. ^ "eBay and Jonathan Adler Partner to Open “the eBay Inspiration Shop” – 24/7 Shoppable Storefront Powered Exclusively by eBay Mobile | Business Wire". www.businesswire.com. Retrieved 2015-11-04.