Wesfarmers' Amazon Gorilla beats Harvey's latest outburst

Wesfarmers' Amazon Gorilla beats Harvey's latest outburst

Summary: In one week, we've seen the figures behind two successful Australian businesses choose to rise up to the challenge of tough retail conditions, or whinge that the government is making it all too hard.


The man who wants Customs to inspect every incoming package to Australia to put GST on it complains that the government is hindering business in Australia, while another relishes in the challenge that global competitors like Amazon will provide his business with. The stark contrast is of two executives heading up some of the biggest retailers in Australia, which are now forced to compete in a global market thanks to e-commerce.

Earlier this week, professional old man yelling at cloud retail billionaire and Harvey Norman founder Gerry Harvey complained that there is too much government red tape preventing him from doing business, and that it is impacting on retail sales.

"It's too hard, the lawyers had to do things, accountants had to do things to get over that barrier and the next barrier and the next barrier — I just said 'too hard, I'm not going to do it'," Harvey told Fairfax as his company reported its third consecutive quarter of growth.

Harvey didn't name any so-called "nanny state" laws or rules that are preventing him from doing business, but he was still going to complain about it.

After the boom in online retail, the complaints from the billionaire businessman seemed to become more frequent. Although he advocates the government "doing as little as possible and people power doing the rest", Harvey is not so much a fan of Australians shopping overseas, where retailers charge significantly less for electrical goods than what you can buy in your average Harvey Norman retail outlet. For years, he has complained about online retailers, and called for government intervention to help out by charging GST on goods under AU$1,000 purchased overseas.

The Productivity Commission worked out that with around 58 million parcels entering Australia under the low-value import threshold, the cost of processing all those parcels would outweigh the money brought in through GST revenues. The former government said it would hold off on a decision until more data is available, and this week, new Treasurer Joe Hockey again delayed making a decision on lowering the threshold.

While this will no doubt infuriate Harvey further, some retailers see the global online market glass as being half full.

Richard Goyder, the managing director of Wesfarmers, which owns supermarket giant Coles, as well as department store Kmart, office supplies store Officeworks, and home improvement store Bunnings, does see online retail as being a major threat. In a speech to shareholders yesterday, he labelled US online retail giant Amazon as the "Amazon Gorilla". The retailer already offers all of the products of Kmart and Target, as well as most of the products of Bunnings and Officeworks, and a good portion of Coles'.

"They even sell coal!" he said.

But the managing director did not complain about the government impeding competition in Australia, instead saying that Wesfarmers welcomes the competitive challenge.

"All Wesfarmers retail businesses like Coles have to be entrepreneurial, fast moving, long term in outlook, innovative, and fit to take on not just Woolworths, Aldi, IGA, and Costco — who are aggressive competitors, not just on price but also in terms of store network growth — but new entrants such as Amazon, which operates in a borderless world," he said.

"As management of your company, we look forward to taking on these new competitive challenges, and hopefully within a framework that encourages competition to build real and sustainable shareholder (and stakeholder) value over time."

There's no doubt that Goyder is lobbying the government behind closed doors to make it easier for the company to do business in Australia, but the attitude difference between Goyder's vision of online retail as an entrepreneurial challenge, versus Harvey's impotent and misdirected rage at the government for not helping more to prop up his outdated business model as more customers flock online, speaks volumes.

Topics: E-Commerce, Australia


Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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  • Grumpy old men

    Harvey is operating stores in 8 countries, at last count.

    These are all old-fashioned stores. They are stores for people who don't mind having to pass through an inspection by a beefy security guard at the front door who will tell you not to come back if you refuse to allow your bags and private belongings to get searched. They are stores designed for people who don't like the internet, for people like, ahem... Mr Harvey himself.

    Harvey's biggest selling items are large LCD televisions and air conditioners. These items are almost completely unaffected by overseas internet sales. So, just like his invasive security searches, Harvey's rants about evil internet sales are also just a bluff.

    But at least Mr Harvey has something else to rant about now, so he can stop thinking about his arch rival, Mr Kogan, who has a more successful business model.
  • Zip it

    Gerry needs to zip it. For years I've watch him trample local businesses by somehow getting exclusive deals on big ticket items so we have no competition from the locals. Using his buying power, he practically forces manufacturers into exclusivity deals to be the only deal in town. Now we have a case where locals are tanking and we are ending up with maybe 2 or 3 mass retailers fighting among each other to see who can sell a box cheapest leaving no room for really dealing with customer concerns and looking after them.

    Ironic he now feels as the local family owned businesses have done for the last couple of decades.

    Suck it up princess. Go and enjoy the billions you made doing exactly to others as is now being done to you. Karma.
  • Whinger

    reckon the 10% GST on all overseas parcels over $20 (incl. shipping) is a bit of a red herring myself. look how much a hassle it is for parcels over the threshold.. duty, processing fee, customs broker fee.. add up all the fees and charges and you are forking out over $60 before you get your parcel.. probably.

    Australian retailers will very likely respond to that by reducing range and hiking up prices, that is precisely what happened with books when parallel imports were knocked back.. month later the price of a mass market paperback book went up five dollars, in-store range was drastically reduced and requesting a book not in stock was futile.

    Australians are bored with low volume/high market retailers. They're beyond stale. Even if Australia is rendered a retail gulag as it was pre-Amazon, i'll still avoid the likes of Harvey Norman and David Jones as a matter of principle. Not opening my wallet for those greedy grubs.