Harvey got it half right

"It is all very over-hyped and the predictions of a lot of people are too optimistic," the co-founder of Harvey Norman said at the time.

"I would think that most of the online business will be conducted by traditional retailers and that over 90 per cent of the e-retailers will in fact all go out of business, one after the other."

Mr Harvey was half right during his February 2000 interview with Channel Nine. The dotcom bubble exploded just weeks later, taking with it many online start-ups.

But where he missed the mark was in predicting that online selling would be conducted by traditional retailers. Traditional, or bricks and mortar, retailers have been struggling to compete with start-ups. And a string of names acquired by established brands in the past decade have been shut down or simply disappeared.

They include Wineplanet.com.au, which was sold to Foster's Group, Greengrocer.com.au (sold to Woolworths) and The Spot (David Jones). The biggest international brand names such as net-a-porter.com, the outnet.com and market leader Amazon.com have no real-world presence.

Yesterday Mr Harvey insisted he was still "on the money" with his predictions.

"Back in the late '90s, before the dotcom boom burst, I set up a site looking at how many hits they had. I had a thing with hundreds of people there and I got up and said 'my opinion is that you will all go broke' . . . site after site blew up," he told BusinessDay.

Indeed, a decade ago traditional retailers had little to fear from e-tailers. Sales were tiny and many burnt through their cash piles trying to woo new investors, rather than win over customers.

Others were too ambitious, attempting to be all things to consumers, which came with massive overheads. Some simply failed to sort out the logistics of efficient delivery.

Wineplanet co-founder Mark Mezrani points to the large distances in Australia as a continuing challenge to e-tailers. This often results in courier costs coming in as high as international orders. As well, pricing is lower for leading online sites in the US and Europe.

Foster's Group paid $54 million for Mr Mezrani's wineplanet.com.au in early 2001 but the business was later shelved.

Mr Mezrani believes the Australian online brands that have bloomed are those that sell services such as webjet.com.au (travel) or seek.com.au (employment) as well as real estate offerings.

"There's a lot more demand for services and information-based sites, instead of buying products that you can't feel or touch. Many people are still very wary about buying online," Mr Mezrani said.

In the February 2000 interview, Mr Harvey tipped that as many as 15 per cent of his company's turnover would come from online sales over the medium term. Apart from a photo order facility, Harvey Norman's internet site does not offer online shopping, although it does have plans for a new site soon.