Getting it right on online retail

Business Spectator

Steve Bartholomeusz has been seriously misled when he says I don't ‘get it' in relation to the internet and online retailing. The comment was made following Harvey Norman's announcement that we had reduced online sales targets.

As Bartholomeusz put it: "Harvey said at the weekend that he had reduced Harvey Norman's online sales targets from five per cent of sales within two years to between one and two per cent after the launch of the group's online transactional site last year had generated only half a percentage point of its turnover."

Let's get a few things clear. First, I ‘get it' and moreover, I am one of the few who is actually releasing the figures on what is going in. The numbers in support of the notion that online retailing is taking off are simply not there.

I am working off our substantial database and we (along with similar retailing operations all over the world) continually find that the internet accounts for only a fraction of our sales – maybe one per cent for bedding, maybe one per cent for fridges, maybe two per cent for television – this is not a substantial or lucrative area.

What's more, commentators in this area should be aware there are competing agendas here – group buying sites are struggling now with falling open rates and interest fading among the wider public. Maybe nobody wants to believe the figures for online retailing are actually so low, but they are – I am just the first to say it.

Harvey Norman is not new to this area – back in 1999 we were one of the first to experiment in online retailing and we found we were doing $50,000 a week selling items online. Three years later we went at it again – the result: $50,000 a week. Maybe a lift to $100,000 at Christmas, but this is not major business for an operation our size.

Instead of trying to make online sales bigger than they actually are we have been working on what we call the ‘omni-channel' strategy. This has already been highly praised by those who have analysed it, such as Microsoft.

Within this strategy we seamlessly integrate our customer experience across all channels.

We already have a strong brand – it was named the third most valuable brand in the Asia Pacific by Interbrand in 2012. Now we integrate all channels – physical stores, social media, marketing, smart TVs, kiosks, distribution centres, home services and mobile devices.

The way I see it people come and have a look on the internet and then they go to the shop, this is now a well-established fact in our business…it is not supposition.

Will it stay like this forever? I don't know - nobody knows - and anyone who purports to suggest they know is kidding.