Retailers: stop competing with yourselves

Retailers: stop competing with yourselves

Summary: This is an open letter to Australian retailers, big and small, who feel that they have been wronged by the internet. Stop whining and get with the program.

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commentary This is an open letter to Australian retailers, big and small, who feel that they have been wronged by the internet. Stop whining and get with the program.

Money

(Money image by Cimexus, CC2.0)

You retailers have taken to the streets in the last 12 months, complaining about how offshore, online stores are pinching their rightful business by dodging the GST on sub-$1000 sales, and undercutting them with cheaper prices.

Only now have retailers like Myer, Harvey Norman and David Jones decided to step tentatively into the online world to try to keep some sort of current in their rivers of gold.

Harvey Norman, for example, opened a store in China, as well as a daily deals site for low value, everyday purchases. Myer also has a China-based store, while David Jones uses the internet to reach out to its customers, too.

Gerry Harvey has told his team in no uncertain terms that he expects them to make a billion dollars in a decade from the store's online offering.

This bothers me, because it sounds, in the end, like Harvey is trying to create a competitor to his physical stores, not digital real estate that will make shopping a better experience. Shouldn't he be considering how he can use his onshore advantage, that is, the physical stores, to make his online stores better than those operated by an overseas brand? He definitely shouldn't be flaunting a big dollar figure and saying: go, fetch. Treating online like the river of gold that bricks-and-mortar stores were in the '80s, '90s and early 2000s is a capital sin.

On the other end of the spectrum, JB Hi-Fi is treating the online business like a fence to keep customers in Australia who want to shop offshore.

Terry Smart, the JB Hi-Fi CEO, told ZDNet Australia this week at the announcement of the company's latest results that the company was overhauling its online channels to trap customers who would have spent their money offshore to support its bricks-and-mortar business.

New features include the ability to pick up an item in-store after ordering it online, as well as an overhauled gift card system to make it easier for customers to manage their account balances. All of these things are features that are likely to get customers coming back to JB Hi-Fi instead of using Amazon.

JB Hi-Fi is also onto a winner with its price point. It has one of the lowest costs of doing business in the retail sector, meaning that cheaper prices can be passed onto customers.

In the recent report by the Productivity Commission, research revealed that consumers are tempted into an offshore, online store model for cheaper prices than they can get in Australia.

Coupled with cheap prices and a beefed up online offering, JB will claw back customers burned by the online proposition offered by the big retailers like Harvey Norman and Myer.

By opening an online store that doesn't feed back into your bricks-and-mortar stores, you're effectively competing with yourself, and that's no way to do business.

Sincerely,

Luke Hopewell

Shopper and Journalist

Topics: Government, E-Commerce, Government AU

Luke Hopewell

About Luke Hopewell

A fresh recruit onto the tech journalism battlefield, Luke Hopewell is eager to see some action. After a tour of duty in the belly of the Telstra beast, he is keen to report big stories on the enterprise beat. Drawing on past experience in radio, print and magazine, he plans to ask all the tough questions you want answered.

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Talkback

7 comments
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  • Surely the fact that Australian retailers can offer Australian warranties and electrical goods suitable for use with Australian power outlets out-of-the-box can be used to their advantage as well.
    scotttt
  • Hey scotttt,
    You're spot on with that one too. Tony Smart told us that the local cabling requirements for TVs and gadgets as well as the frequency/band capability of mobile phones is something that will continue to give JB Hi-Fi a competitive advantage over online, offshore stores.

    -Luke
    Journalist | ZDNet Australia
    LHopewell
  • @Scott, you'd think so, but plugpaks have been universal for voltage and frequency for some time now, and many have slick adapters for Aussie outlets. Those that don't usually ship with somewhat less than slick travel adapters.

    Warranties, well, it usually comes down to a manufacturer warranty now, how many retailers are capable of doing repairs? If I buy a hard drive in Australia and it fails, I'm faced with getting an RMA and returning it to the manufacturer for replacement. Just like if I'd bought it online.

    I'd see the differentiator being for things you want to see, or try on etc before you buy them. Or for things I want immediately. Bricks and Mortar shops shouldn't try the 'we can order it in' ploy, online is going to beat them every time.
    meski.oz@...
    • From memory, Videopro (who have a good online presence) will look after warranty issues for you. They have their own workshop which is accredited for warranty repairs on the products they sell.
      Haven't seen too many others who will help you with warranty repairs.
      Yoda7
  • I would think that part of the issue is that the bricks and mortar stores and the business models used have caused retailers to disengage their customers. In the changing retail environment, lack of differentiation , poor customer service, attention and communication have created an environment where customers are seeking more cost effective and efficient service offerings.
    The majority of retailers need to rethink how they engage and service their customers to create a point of differentiation that in turn will create greater loyalty. Both Bricks and mortar and online offerings are the future - creating a solution that engages the customer in a responsive, efficient way is part of the conundrem - it is interesting that retailers have not yet considered the benefits of social engagement / networking to create an involved customer experience thus greater interaction and loyalty to the retail brand.
    Billw-ca1bf
  • JB Hi-fi have got it right. Pretty simple really.
    I recently bought a 55" LED LCD TV via their website at a really good price with free delivery.
    Most people just want to order online and go pick up at the local store or have large items delivered. My local computer shop has had a superb website and offered this service for over 10 years including Australia-wide delivery. The owners may not be high-profile like Gerry Harvey but they are very wealthy.
    Yoda7
  • "the ability to pick up an item in-store after ordering it online"

    The place I work does this too (The Good Guys). You place your order, pay for it online, print your confirmation receipt and either 1) pick it up, or 2) have it placed on delivery for your next available day (I think it places the order on the nearest available store, but not sure).

    This is the way business should be run. Yes, the option to shop online is there for people, but this should be supplemented by the physical stores which can service the local area, and also supply employment to people for that face-to-face interaction.
    dmh_paul