Retail giant Harvey Norman today confirmed it had launched a new website to promote daily deals on products to customers, following a trend set by dozens of other companies over the past several years following the immense growth of sites like LivingSocial and Groupon in the United States.
The site, Harvey Norman Big Buys, is currently advertising a Revlon cosmetics pack with lipstick and eyeliner for $53, which it describes as "unbelievable value". It's common for daily deals to be shared around through social media channels, but the deal, which is listed as being sold out, has attracted relatively little interest, with no re-tweets on Twitter and just eight recommendations on Facebook.
Harvey Norman confirmed the site was legitimate and owned by the company, but declined to comment further.
The news comes just a week after Harvey Norman founder Gerry Harvey promised to set up a strong presence for the retail giant online. The company has long maintained that if it was to sell goods online it would be cutting the grass of its franchised stores distributed around Australia, and has recently been embroiled in a bitter battle with international online retailers, which enjoy exemption from certain taxes when selling into Australia.
At the time, Harvey said the company no longer had any choice. "My heart's beating very strongly on whether we make any money out of it," he said. "I haven't got any choice. I've got to cannibalise our stores."
Dean McEvoy, the co-founder and chief executive of group buying site Spreets, which was recently bought by Yahoo!7 for about $40 million, said in an interview it was ironic that Harvey Norman had entered the market, given the company's recent perceived antipathy towards the internet in general. He also was puzzled by the Revlon sale, given Harvey Norman's traditional focus on product lines in the electronics and furniture areas.
The executive said the group buying space was attractive because it was currently generating high revenue figures for many of the companies competing in it. Some of the major companies operating in the area in Australia include Spreets, Cudo (backed by ninemsn and Microsoft), Groupon (through its Stardeals brand), LivingSocial-backed Jump On It, and more.
"You'll find a lot of people jumping into this space," said McEvoy.
However, the executive said the model chosen by Harvey Norman, delivering a daily deal on one product per day, was fundamentally different to where much of the market was currently. The "daily deal" style of site had been around since about 2001, he said. In comparison, the new style of sites similar to Groupon had been successful because they were actually offering discounts to services, inspiring people to try "something interesting and different" in their home cities.
"Just delivering a bargain or discount to someone is not really that empowering — it doesn't have longevity," said McEvoy. "When you're out there trying to inspire people to try different parts of their city, that's what we try to do."
McEvoy said when Spreets was being built, it was important that the company grow a quality database of customers, so that it could take that database to merchants, as well as getting quality deals from the merchants to push to customers. If you sent a merchant bad customers, he said, they might not deal with you again.