Retailers: stop competing with yourselves
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.
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